OUTSOURCING SOLUTIONS INC.

Bonus Incentive Compensation Plan Description and Payout Guidelines

I.    Purpose

      Outsourcing  Solutions Inc. (the Company) has created this Bonus Incentive
      Compensation  Plan to provide  significant cash incentives for executives,
      managers,   and  other  key  personnel  to  attain  the  Company's  EBITDA
      objectives.  The Plan is intended to provide financial recognition for the
      results  these   individuals   achieve  in  exercising   their  judgement,
      initiative, and effort.

II.   Effective Date

      This Plan is  effective  January 1, 1998 and is intended  to run  annually
      thereafter,  concurrent  with  the  Company's  fiscal  year  (January  1 -
      December 31).

III.  Participation

      Participation  in  the  Plan  is  limited  to  executives,   managers  and
      equivalent,  and key professional personnel.  Each year, senior management
      of the Company will recommend to the CEO the participants for that year.

      Once  eligible,  persons not employed in a designated  position for a full
      calendar year will be eligible for  incentive  payments on a prorata basis
      for their period of participation.  A person must be employed by September
      30 in order to receive a prorata incentive payment for the calendar year.

      An  individual  must be on the  payroll  at  December  31 in  order  to be
      eligible to receive an incentive  payment for that year.  Participants who
      terminate  employment after December 31 but prior to the date when payouts
      are made will not receive an incentive payment except at the discretion of
      the CEO.  Participants whose employment is terminated during the year as a
      result of retirement,  disability, or death will be eligible for a prorata
      incentive payment.

      An  employee  is eligible  to  participate  in only one Company  incentive
      compensation  plan  at a time.  Individuals  participating  in  commission
      plans,  override plans, or branch  productivity  plans are not eligible to
      participate  in this Plan.  Participants  in this Plan are not eligible to
      participate in any other incentive plan.

IV.   Target Bonus Incentive Compensation Awards

      Target  awards  represent  the  percent of base salary at December 31 that
      would be paid when Consolidated  Corporate,  Business Unit, and Individual
      objectives are completely  fulfilled.  While these a wards may be adjusted
      when actual  performance varies from planned  performance,  in no case may
      the  adjustment  exceed  150% of target.  No awards  will be paid when the
      Company's  consolidated  actual performance is 80% or less of the budgeted
      plan.

      Unbudgeted  acquisition impact on target performance will be measured at a
      rate of 50% of  incrementa  EBITDA.  Acquisition  impac  on  targets  will
      generally  affect only the  Consolidated  Corporate  Portion of the award.
      Acquisition  impact will affect the Business  Unit targets if the acquired
      entity becomes a part of the Business Unit.

V.    Performance Criteria

      A. Corporate Criteria: Represent X percent of total target  award and will
         be determined  on the  percentage  attainment of  approved Consolidated
         Corporate EBITDA objectives.

         Actual vs. Plan*                Corporate Performance Adjustment Factor
         Less than 80% of Consolidated    0% Nocorporate, business unit, or
                                            individual  bonuses will be paid 
                     80%                  70% of corporate target bonus 
                     90%                  85% of corporate target bonus
                    100%                  100% of corporate target bonus
                    110%                  125% of corporate target bonus
                    120% or above         150% of corporate target bonus

         *Interpolated based on actual results; e.g., 98% actual performance vs.
         plan yields 97% of corporate target bonus.

      B. Business Unit  Criteria: Represent Y percent  of total target award and
         will be  determined on the  percentage  attainment of approved business
         unit EBITDA objectives.

         Actual vs. Plan*            Business Unit Performance Adjustment Factor
         Less than 80%               0% No business unit bonus will be paid
                   80%               70% of business unit target bonus
                   90%               85% of business unit target bonus
                  100%               100% of business unit target bonus
                  110%               125% of business unit target bonus
                  120% and above     150% of business unit target bonus

         *Interpolated based on actual results; e.g., 98% actual performance vs.
         plan yields 97% of business unit target bonus.

      C. Individual Criteria: Represent Z percent of total target award and will
         be  determined  based on the  attainment  of  individual  objectives as
         judged by each participant's supervisor.  Individual objectives will be
         weighted, with the total weight equal to 100% of the individual portion
         (Z)  of the  total  target  award.  No  corporate,  business  unit,  or
         individual bonuses will be paid if actual Consolidated Corporate EBITDA
         is less than 80% of plan.

      D. Computation Examples:

          Assume: Vice President eligible for 20% target based on 40% corporate,
          40% business unit and 20% individual:

          Base Salary:                  $80,000
          Target Award:                 20% of base or $16,000
               Corporate portion:       40% of $16,000 or $6,400
               Business unit portion:   40% of $16,000 or $6,400
               Individual portion:      20% of $16,000 or $3,200
          Minimum award:                0%
          Maximum award:                30% or $24,000

          1.  Performance Situation #1:

              Corporate performance 90% of plan,
                payout (85% x 6,400):                            $ 5,440
              Business unit performance 100% of plan,
                payout (100% x 6,400):                           $ 6,400
              Individual performance judged 110% of plan,
                payout (125% x 3,200):                           $ 4,000
                                                                 -------
                                                                 $15,840
                                                                 =======

          2.  Performance Situation #2:

              Corporate performance 110% of plan, 
               payout (125% x 6,400):                            $ 8,000
              Business unit performance 100% of plan, 
               payout (100% x 6,400):                            $ 6,400
              Individual performance judged 90% of plan, 
               payout (85% x 3,200):                             $ 2,720
                                                                 -------
                                                                 $17,120
                                                                 =======

          3.  Performance Situation #3:

              Corporate performance 100% of plan, 
               payout (100% x 6,400):                            $ 6,400
              Business unit performance 90% of plan, 
               payout (85% x 6,400):                             $ 5,440
              Individual performance judged 75% of plan, 
               payout (0% x 3,200):                              $     0
                                                                 -------
                                                                 $11,840
                                                                 =======

VI.   Bonus Incentive Compensation Pool

      A Bonus Incentive  Compensation  Pool will be accrued annually and will be
      allocated among participants based on a combination of corporate, business
      unit, and individual performance.  The size of the pool will be determined
      annually based on Company and Business Unit  performance  against  targets
      and the base salaries of the participants of the Plan.

VII.  Plan Administration

      Participation:  In December of each year Management will compile a list of
      all employees eligible for  the  following  year and submit  it for review
      and approval by the CEO.

      Payouts:  Payouts  will be  made in a single  lump sum by  March 31 of the
      following  the year in which bonuses were earned.

VIII. Management Rights

      This  Plan  replaces  all  prior  bonus  incentive   compensation   plans.
      Outsourcing Solutions Inc. reserves the right to alter, amend, suspend, or
      terminate this Plan  prospectively  (and any other  variable  compensation
      plan) at any time without notice and without any future liability.

      Designation of job classification,  salary grade, or an individual neither
      guarantees  the  individual  a right to a bonus  nor a right to  continued
      employment.  The payout  guidelines  and  formulas  described in Section V
      herein, as well as actual payouts recommended,  may be adjusted, modified,
      or revised at any time at the discretion of the CEO subject to approval of
      the Board of Directors.

      An employee who is included in this Plan may be given  certain  individual
      performance  objectives  to achieve in order in  qualifying  for any bonus
      payment.  Such  objectives,  and the  standards  by which  achievement  is
      measured, may vary from job-to-job, and will be determined at the start of
      each calendar year through discussions  between the employee's  supervisor
      and the  employee,  and must be approved by the  supervisor's  supervisor.
      Approved individual performance objectives must be submitted in writing to
      the CEO for  approval no later than  January 31 of the  calendar  year for
      which they apply. Such individual  performance  objectives may be reviewed
      and  modified by meeting and  co-signed  agreement of the employee and the
      employee's supervisor at any time during the calendar year.