Return of Security Deposit

I rented a room in my home and collected a security deposit, one months rent. Per the agreement, the roommate did not give proper notice, not in writing and not sufficient time. He also didn't pay his last month's utilities. Upon moveout, he damaged the dwelling. I gave him an itemized breakdown of the deductions. They were more than the security deposit. Therefore, I requested a check for the difference. He wrote me a letter that he would not pay for any lost rent, utilities or damage because I didn't have his security deposit in a separate account. Is this correct? How can I get the money owed?