sad and discouraged

[SheltieChe]

not to address original situation but please, never underestimate fearful dog. They are as likely to bite as aggressive ones. Truly agressive dogs are rarity though so this leaves a lot of biting to the fearful ones:sadsmile:
In our off leash class we have scaredy cat of a 1 year old Shepard, who can be easily intimidated by smallest dog...now if his owner holds the collar mentality goes "me and my dad are going to show you" this boy becomes a terror and will lunge and bark and bite... the moment owner lets go of the leash/ collar we back to "tail under the legs and let me hide under the chair" personality.
Many of herding breed dogs have increased reactivity, goes with territory. Yo might want to look into Gentle Leader for Kyara, it really helped my boys to build better responses.

 

[KarenCurtis]

by Meldor
He approaches closer saying ''I used to train dogs'' I'm like ''Okay she is scared'' as I am trying to old onto the leash of my panicking barking growling Kyara, he keeps on approaching and starts yelling at my dog to lie down. I just put myself between him and my barking/freaking out Kyara. And he's like ''Your dog is agressive'' I said ''No she never bit anyone, she is scared of strangers, I'm working on training her''. Anyhow he keeps on talking as Kyara barks and I finally manage to get away from him and get inside.

I am thinking that first, the neighbor startled your dog by suddenly appearing, and then to top it off, yells at her. That would certainly make my dog bark!!!! Or any dog, for that matter.
I used to say that I would not use treats while training, I changed my mind on that one!! I have to use treats around my neighborhood, and it makes things much better. I use cheerios while walking past people, certain houses, etc. Now I need to use them as often as need be. Good luck to you, keep working on it, most of the advice here has been really good.