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A demand letter for payment is a formal notice requesting that a debtor pays the amount owed by a specified date. Typically used by collectors, it serves as a final warning before legal action is pursued. This video tutorial reviews the key aspects of payment demand letters and provides access to a free, official template. The importance of such a letter lies in its role in notifying the debtor of the collection efforts, documenting the reason for the demand, specifying the amount owed, and establishing a due date. Additionally, it may help in legal disputes and can be used to propose a reduced settlement as an incentive for timely payment.