It depends on if you want to call your landlords bluff, and want to deal potentially with the hassle of filing and court costs.

Most likely your landlord will back down if you threaten or settle if you go through with it. Most courts are tenant friendly in NJ, and the penalties if your landlord goofs off with your security deposit are clear.

Your landlord can't do anything to YOU, especially if you don't expect to need a reference any time soon if you press your case. Even if you take him to court over it and lose, you are only out a few hundred bucks in court costs and your time and hassle.

Its really a question as to who is 900 bucks worth more to.