Dude I'm in your exact situation...hired someone to do a project, and he is now a year late. I gave the guy concession after concession just to get him to finish...hell I cut about 70% of the features just to have him finish quicker. And told him...as long as he finish quickly I'd waive the late fees.
You can't work with these people...even after all my concessions the guy still gave me major attitude when I demanded that he hurry up or I'll sue him.
So Monday I'm getting the lawyers involved. Not sure about your situation, but I had my guy sign a contract that specified late fees. So its a little easier to sue him, since the late fees will more than cover lawyer fees. Of course since you have a smaller amount, you can try your luck at small claims court.