I do not practice in Indiana, but typically, you would not be liable if the Chihuahua's came onto your rental property and were attacked by your dogs. I suggest that you send your neighbor a certified letter warning him that it is not safe to have his small dogs running around the neighborhood. I would keep a log of each time that you see the dogs loose and repeatedly report him to animal control.
This is not to be construed as legal advice. I do not have an attorney client relationship with you.
A written log of each complaint to Animal Control is in order; photographs are even better.
Be careful not to suggest that your dogs are in any way aggressive; it must be clear that the other dogs' owner is the negligent party.
The foregoing is for general information purposes and does not establish an attorney-client relationship.