The Discover card organization has reached an out-of-court settlement with 13 credit counseling agencies, ending a long-running controversy on a fast-growing fringe of the consumer credit business.

The unit of Morgan Stanley, Dean Witter, Discover & Co., had refused to do business with the agencies, which operate independently from the credit counseling umbrella organization, the National Foundation for Consumer Credit.

Discover had refused to pay these agencies the fees it paid to those under the National Foundation framework. The card issuer was sued before its merger into the Morgan Stanley group.

After agreeing to terms with the independents in March, Discover began paying them in June, according to one of the agencies that counsel consumers who need help restructuring and paying down their credit card and other debts.

Morgan Witter declined to discuss its relationship with the independent agencies.

With Discover no longer a defendant, the antitrust suit in U.S. District Court for the Eastern District of New York is still pending against the nonprofit National Foundation for Consumer Credit and a number of bank executives who sit on its board.

In the three-year-old suit, the 13 plaintiffs accused the industry establishment of monopolistic practices.

Discover had refused to deal with independent agencies from which its customers actively requested help.

Terms of the Morgan Witter agreement were not disclosed. However, Joel Greenberg, chairman of one of the plaintiff companies, said the settlement "opens the field for us to coexist with NFCC members in a single market. We are better able to serve our clients who are their customers."

Credit counseling agencies, which lenders view as a bulwark against bankruptcy filings, have been expanding as delinquency rates have risen. The agencies typically help debtors establish a budget and work out repayment schedules, often getting lenders to waive late fees and interest charges.

Lenders generally pay such agencies about 12% of a debtor's payment, known in the trade as "fair share contribution."

Durant Abernethy, chief executive officer of the NFCC, called the remaining portion of the lawsuit baseless. He denied that "the NFCC reached a deal with lenders so they would not do business with anyone but us," as the independent agencies contend.

"The lawsuit is still pending," he said, "because we are not going to settle with them."

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