My sister (Mary) is a 34F with two children, 11 and 4. She has been diagnosed with crippling anxiety issues that have been medically documented (I'm not sure exactly what her official diagnosis is, but I can find out if needed), and is on disability and medication to treat her condition. She lives at home with my mother a 65F. They share an apartment and living expenses together. My mother (Tammy) also helps her with her bills, such as cell phone payment and car payment. The rest of the bills are split evenly such as rent, utilities, etc.
My sister collects social security for her and her children, as well as my mother as she is retired. My sister also works under the table doing clerical work for a car dealership to help with her bills.

Recently, my sister became behind on her bills (more about this later), and asked me to help her catch up on her car payment, and maintenance for her car, which badly needed an oil change, and a brake job. I helped her under the condition that she pay me 100 a month on a specific date, and that she ensure that the bills that she pays with my mother are also kept up.

I was reluctant to do this because 1, I don't have the money, I ended up using a credit card to pay her, 2, she already burned me for 1200 dollars, which she also never paid me back. I did it anyway because I don't want her kids to suffer as a result of her not being able to get to work, or her car breaking down because it was not maintained, or repoed for non payment.

Fast forward 2 months, and she has paid me one payment so far, and the next payment is due today, and she said she would give me the money for that, which is fine.

The problem is with the way she is treating my mother. She has only given her a quarter of the rent money (her share is 800), and has not paid against any other bills for October. She claims that she buys things for the house like food, and has to buy things for her kids, and doesn't have the money. My mother has gone through her room to find receipts for 300 dollars worth of hair extensions and hair products, and other bags full from department stores of things she just stores in her room and doesn't use. My mother also watches her kids when she wants to go out, and then doesn't communicate to her when she's coming back, or doesn't respond when my mother wants to go out and do something on her own, and can't leave the kids alone, causing her plans with her friends to fall through. When confronted, her defense is that she works her ass off and deserves time to herself, but doesn't respect anyone else when they help her.

TLDR: My sister owes my mother and I money, she constantly makes deceitful excuses as to why she doesn't have the money, spends it on things she shouldn't be instead of paying her bills, and deflects when confronted about the issues that she's causing with myself and her mother.

I don't really know what to do in this situation, and it seems like she has the upperhand in every scenario or outcome. If we simply cut her off, then her kids suffer.