False Accusation , Legal Notice , Threats

Hi , I was in talk with one of my colleague for some time and both of us decided to take the proposal for marriage to our respective families . My family was little hesitant to start with but some how agreed for my happiness and wish . Girls Father came with the proposal of marriage couple of months back and both parties mutually decided to have engagement ceremony on 12 th May next month , but in between the Girl started to talk to my Sister and was mostly insulting to me and my family , saying things like I am spine less etc to which my Sister raised alarm to me and my parents and eventually it looked to me like her nature to be aggressive , So with all these day to day issues my regular job and life got disturbed , my mother health started to deteriorate and she went in to depression , So I decided to raise this issue to my parents and my parents tried to talk to them to close things amicably as it didnt look to me or my family that this alliance will be successfull , on that the Girl and her family starting abusing ,threatening us for legal actions , demanding money for expenses which my father aggreed to share aswell . but couple of days back they have send legal notice against all my family alleging of dowry and defamation which is totally false and we have all the proofs aswell. Please advice