I agree with tube_ee. The fact that she’s willing to hurt the kids and use them as pawns says a lot about her. Your brother-in-law needs to put his foot down. If that’s enough to cause a divorce, then their relationship wasn’t very good to start with. From the sounds of it, though, it seems like you’re brother-in-law doesn’t have the will to stand up for himself. Train wreck.

The best thing you can do is make sure that you don’t get suckered into “loaning” them money. Just let the chips fall where they may.