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A demand letter for payment is a formal notice requesting a debtor to pay an owed amount by a specific date, serving as a final warning before legal action. This video reviews essential information about payment demand letters and provides access to a free, official template. Sending a demand letter is crucial as it alerts the debtor to potential legal consequences, records the rationale for the payment request, specifies the total owed, sets a payment due date, documents the demand for future legal reference, and can offer a reduced settlement as an incentive. The demand letter must adhere to certain guidelines to be effective.