​Client ghosted without paying caught using my work

Hey guys, i have been reading this sub for some time and just came across this problem. Maybe you can recommend a suitable course of action.

I’m a freelance logo designer, and this is my primary source of income. I grew up in a poor family and couldn’t attend college, but I had a passion for arts, so I decided to make the best use of my talent. I really put all my energy into my work. I don’t take on more work while I’m on a project. This helps me focus and zero in on my client’s business targets.

Last month, one of my clients decided to ghost the project without paying. I spent 10 days researching, designing, and fine-tuning his logo, but all went down the drain. I did have a contract in place, but I didn’t want to waste more time trying to pursue this, so I accepted it as a cost of doing business. The loss of money really hurt me, both financially and emotionally. I’m an honest person, and I can never think of stealing someone’s money or work.

He has been using the logo I made on his shop without my permission. Since he was in another state, I couldn’t directly find out. One day, my aunt uploaded a picture of herself in his shop, and I was shocked to see that it was the same business using my logo.

I sent them an email threatening legal action, so he called and now offers the money he owes me and also a full branding design project.

I was bluffing when I said I would take legal action. I don’t have the time or money to actually do that, but it seems to have worked.

What should I do now? Should I accept payment for both the logo I made and the new project, or just the logo I made? He is asking for the source files and copyrights in writing before he pays. What do I do?