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A demand letter for payment is a formal notice requesting a debtor to pay an owed amount by a specific deadline. Typically utilized as a final warning before legal action, this letter serves multiple functions for the collector. It notifies the debtor of the possibility of legal consequences, documents the payment request, specifies the exact amount owed, and provides a written demand for clarity in case of disputes. Additionally, it can be used to propose a reduced settlement as an incentive for quicker payment. The video tutorial will cover the significance of sending a demand letter for payment and provide access to a free official template.