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A demand letter for payment is a notice requesting a debtor to pay an amount owed by a specific date, serving as a final warning before potential legal action. This video tutorial reviews the key points about demand letters, including their significance for collectors. Sending a formal demand letter alerts the debtor to possible legal consequences, documents the reason for payment, states the exact amount owed, and provides a written demand for future legal reference. It may also offer a reduced settlement as an incentive for payment. Additionally, the video discusses where to obtain a free and official demand letter template.