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A demand letter for payment is a formal notice requesting a debtor to pay an outstanding amount by a specified date. It serves as a final warning from the creditor before potential legal action. This video tutorial reviews the key points regarding payment demand letters and provides information on obtaining a free, official template. The significance of a demand letter lies in its ability to formally alert the debtor of impending legal consequences, document the reason for the demand, specify the amount owed, establish a due date, and serve as written evidence in case of legal disputes. Additionally, it may offer a reduced settlement as an incentive for prompt payment.