Katie Holmes and Tom Cruise in Settlement Talks (Report)

Mid-summer's unexpected boon to the supermarket tabloid business churns on: The latest chapter in the Katie Holmes and Tom Cruise divorce drama suggests lawyers for the couple are currently in the midst of negotiating a divorce settlement.

This according to TMZ, who say both sides have now called a truce in the escalating war of words and are gathered in New York attempting to hammer out an agreement satisfactory to all. Only in the event that the talks fall apart would the case move before a judge -- a July 17 "order to show cause hearing" had been set in a Manhattan family court -- and the media circus that would inevitably ensue.

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Among the key issues on the table, TMZ reports, are child custody, visitation, child support and a property settlement. 

The development comes not long after Bert Fields, Cruise's longtime lawyer, gave a frank interview with BBC News in which he laid out his legal strategy, saying he'd issue his own divorce documents after Holmes' camp had a chance to "play the media."

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Though Fields wouldn't specify where the case would be filed -- a California filing, unlike Holmes' New York filing of June 28th, might help Cruise earn joint custory of daughter Suri Cruise -- TMZ reports that the settlement might be ratified entirely in New York.