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A demand letter for payment is a notice that requests payment from a debtor for an amount owed by a specific date. It serves as a final warning before legal action. Sending a formal demand letter is beneficial as it notifies the debtor, records the reason for payment, informs of the amount owed and due date, and can be used as evidence in court. It can also be used to offer a reduced settlement. Download a free template for drafting a demand letter.