My view is that you paid day care in advance but those fees were to cover one month's care which you did not get. Since contract does not clearly say you forfeit the fees, then she has no right to keep them. Now I read you post again, I think she also agree that she owes the money but she just not have it at the moment. That should not be your problem.
I would write letter telling her that you respect her choice to term, but she not entitled to keep fees and they must be returned immediately since service which fees are for, clearly not going to be provided. That not your problem if she spend the funds and should have considered this when she decided to terminate contract with no notice. That you expect all owed money returned by firm date or you will take her to court, and you will be seeking interest for the delay in return of the money plus any court related fees. Put in writing with clear deadlines, including a time.
I'm not sure if you would get these things but I think putting in writing clear expectation with deadline is good idea. Then if you not got what you wanted after deadline it not wishy-washy about what step you take next.
Maybe speak to a lawyer first. Sometimes they will speak to you over phone for general advice if not complicated issue. Even if you go in for 30 min appointment that $100 fee might be worth it based on what you owed. Since it say you would get deposit back if you had given proper notice, maybe you might get that back too since it seem refundable at times. I not sure though. Speak to lawyer.
All the terms you state are about if YOU cancel contract. But YOU didn't cancel care.



































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