@Sean Chen By the way if your neighbor tries to sue you there may be a clause in your landlord's policy that your insurance company will provide an attorney to defend you.

Without knowing what the monthly rent is, the $500 fee plus the 2 months sounds a little excessive and would probably be difficult to defend in court, and collect if they just walked without paying.

BTW:  As I understand, Small Claims only the principles can appear (aka plaintiff and defendant), and may not have representation. 

You will learn a lot and hopefully never return as a plaintiff nor defendant.

The defendant has not paid the rent.

Our court docket lists plaintiff and defendant for all the fed hearings.

Since it is one word against another, if you go this route, you should be prepared to defend the action in court if it gets to that.

You could still be some what selective but it would be difficult to defend in court to allow one tenant to have a pet and deny another.

In my experience here, many Judges will ask the defendant if he owes the money and if they say yes the gavel will fall and the next case will be called. 

You are a champion!