<PAGE>

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q


(Mark One)

     [X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934.

                For the quarterly period ended September 30, 1998

                                       OR

     [ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

For the transition period from                   to 
                               -----------------    -------------------

Commission file number                 0-27550
                      ----------------------------------

                        FIRSTPLUS Financial Group, Inc.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


            Nevada                                            75-2561085
-------------------------------                           -------------------
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                           Identification No.)


                        1600 Viceroy, Dallas, Texas 75235
-------------------------------------------------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (214) 599-6400
-------------------------------------------------------------------------------
              (Former name, former address and former fiscal year, 
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.   Yes X   No
                                        ---    ---

There were 42,198,388 shares of voting common stock and 690,990 shares of
non-voting common stock, $.01 par value, outstanding as of October 31, 1998.

<PAGE>

                         FIRSTPLUS FINANCIAL GROUP, INC.

                               INDEX TO FORM 10-Q


Part I.  FINANCIAL INFORMATION

<TABLE>
<CAPTION>

         Item 1.  Financial Statements                                                        Page
                                                                                              ----
<S>                                                                                           <C>
                  Unaudited Consolidated Balance Sheets -
                       September 30, 1998 and September 30, 1997.............................  3

                  Unaudited Consolidated Statements of Income -
                       Three Months Ended September 30, 1998 and September 30, 1997
                       and Nine Months Ended September 30, 1998 and September 30, 1997.......  4

                  Unaudited Condensed Consolidated Statements of Stockholders' Equity -
                       Three Months and Nine Months Ended September 30, 1998
                       and September 30, 1997................................................  5

                  Unaudited Consolidated Statements of Cash Flows-
                       Nine Months Ended September 30, 1998 and September 30, 1997...........  7

                  Notes to Consolidated Financial Statements-................................  8

         Item 2.  Management's Discussion and Analysis of Financial Condition
                       and Results of Operations............................................. 11

Part II. OTHER INFORMATION

         Item 1.  Legal Proceedings.......................................................... 18

         Item 2.  Changes In Securities...................................................... 18

         Item 3.  Defaults Upon Senior Securities............................................ 18

         Item 4.  Submission of Matters to a Vote of Security Holders........................ 18

         Item 5.  Other Information.......................................................... 18

         Item 6.  Exhibits and Reports on Form 8-K........................................... 18

SIGNATURE.................................................................................... 18
</TABLE>

                                      2

<PAGE>

                FIRSTPLUS FINANCIAL GROUP, INC. AND SUBSIDIARIES
                      UNAUDITED CONSOLIDATED BALANCE SHEETS
                (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                     ASSETS

<TABLE>
<CAPTION>
                                                               SEPTEMBER 30,    SEPTEMBER 30,
                                                                  1998               1997
                                                               ------------     ------------
<S>                                                            <C>              <C>
Cash and cash equivalents                                      $     73,704      $    94,978
Securities, available for sale                                       30,107           40,995
Loans held for sale, net                                          1,902,126        1,400,446
Investment in securitized loans                                         -            190,861
Interest only strips, net                                           529,841          456,123
Subordinated certificates held for sale                              30,967           18,047
Receivable from trusts                                              298,977          138,816
Servicing assets                                                     81,528           40,516
Other assets                                                        112,886           66,424
                                                               -------------     ------------
      Total assets                                             $  3,060,136      $ 2,447,206
                                                               =============     ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Accounts payable and accrued liabilities                       $     99,622      $    44,445
Warehouse and repurchase agreements                               1,594,588        1,238,156
Term lines                                                          259,615          211,751
Time deposits                                                       261,772          120,025
Bonds                                                               139,511          174,088
Convertible subordinated notes                                       38,520           69,920
Notes payable and other borrowings                                   40,463           39,321
Deferred tax liabilities, net                                       118,652          119,355
                                                               -------------     ------------
      Total liabilities                                           2,552,743        2,017,061
                                                               -------------     ------------

Commitments and contingencies

Stockholders' equity:
Preferred stock, non-voting, $1.00 par value, 8% cumulative
   dividend Authorized shares - Series A - 300;
   Series B - 2,300 Issued and outstanding shares -
   Series A and Series B - none                                           -                -
Common stock, $0.01 par value:
   Authorized shares - 100,000
   Issued and outstanding shares - 41,402 - 1998
     and 36,580-1997                                                    414              366
Common stock, non-voting, $0.01 par value:
   Authorized shares - 25,000
   Issued and outstanding shares - 691-1998 and 691-1997                  7                7
Additional capital                                                  310,143          216,881
Unrealized gains on available for sale securities, net               26,807           20,253
Retained earnings                                                   170,022          192,638
                                                               -------------     ------------
      Total stockholders' equity                                    507,393          430,145
                                                               -------------     ------------
      Total liabilities and stockholders' equity               $  3,060,136      $ 2,447,206
                                                               =============     ============
</TABLE>

See accompanying notes

                                      3

<PAGE>

                FIRSTPLUS FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
                (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                       Three Months Ended          Nine Months Ended
                                                           September 30,             September 30,
                                                    ------------------------    ------------------------
                                                       1998          1997          1998         1997
                                                    ---------    ----------     ----------    ----------
<S>                                                 <C>           <C>           <C>            <C>
Revenues:
Gain on securitized loan sales, net                 $  21,450     $  91,769     $  106,790     $ 238,274
Gain on whole loan sales                               14,561         9,001         28,718        23,790
Interest income                                        74,750        65,156        217,649       150,322
Interest only strips interest income                   30,047        12,978         78,674        24,203
Origination income                                     47,124        15,954        122,274        37,799
Servicing income                                       14,726         7,795         38,632        17,839
Insurance income                                        4,694         1,819         11,672         3,427
Other income                                            1,040         3,640          4,925         4,931
                                                    ---------    ----------     ----------     ---------
         Total revenues                               208,392       208,112        609,334       500,585

Expenses:
Salaries and employee benefits expense                 57,281        40,112        139,713        90,972
Interest expense                                       40,267        31,706        113,680        78,801
Other operating expenses                               82,717        42,012        217,768        97,969
Provision for possible credit losses                   22,940        14,256         56,076        40,035
Impairment of interest only strips                     43,085             -         43,085             -
Lower of cost or market and fair value adjustments     58,115             -         58,115             -
Restructuring and non-recurring charges                36,209             -         36,209             -
                                                    ---------    ----------    -----------     ---------
         Total expenses                               340,614       128,086        664,646       307,777
                                                    ---------    ----------    -----------     ---------
(Loss)/income before income taxes                    (132,222)       80,026        (55,312)      192,808
Benefit/(provision) for income taxes                   50,244       (30,418)        21,019       (73,275)
                                                    ---------    ----------    -----------     ---------
         Net (loss)/income                          $ (81,978)    $  49,608     $  (34,293)    $ 119,533
                                                    =========    ==========    ===========     =========

Weighted average common shares                         39,651        37,172         38,567        35,616
                                                   ==========    ==========     ==========      ========
Basic (loss)/earnings per share                     $   (2.07)    $    1.33     $    (0.89)    $    3.36
                                                    =========    ==========     ==========     =========

Weighted average common shares-assuming dilution       39,651        43,350         38,567        41,015
                                                    =========    ==========     ==========     =========
Diluted (loss)/earnings per share                   $   (2.07)     $   1.16     $    (0.89)    $    2.97
                                                    =========    ==========     ==========     =========
</TABLE>

See accompanying notes

                                      4

<PAGE>

                FIRSTPLUS FINANCIAL GROUP, INC. AND SUBSIDIARIES
       UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                      Accumulated
                                      Common    Common                                  other
                                      stock,    stock,    Additional     Retained    comprehensive
                                      voting  non-voting   capital       earnings       income         Total
                                      ------  ----------  ----------    ---------    --------------  ---------
<S>                                   <C>     <C>         <C>           <C>          <C>             <C>
Balance at December 31, 1997          $ 371      $  7      $219,329      $204,316      $19,262        $443,285
Comprehensive income, net of tax:
   Net income                                                              19,836
   Other comprehensive income:
     Change in unrealized gain on
       available for sale
       securities, net of     
       reclassification amount                                                             883
                                                                                       -------
Total comprehensive income                                                                              20,719
Issuance of common stock                  2                   1,843                                      1,845
                                      -----      ----      --------      --------      -------        --------
Balance at March 31, 1998               373         7       221,172       224,152       20,145         465,849
Comprehensive income, net of tax:
   Net income                                                              27,848
   Other comprehensive loss:
     Change in unrealized gain on
       available for sale
       securities, net of     
       reclassification amount                                                          (2,993)
                                                                                       -------
Total comprehensive income                                                                              24,855
Issuance of common stock                  4                  15,305                                     15,309
                                      -----      ----      --------      --------      -------        --------
Balance at June 30, 1998                377         7       236,477       252,000       17,152         506,013
Comprehensive income, net of tax:
   Net loss                                                               (81,978)
   Other comprehensive income:
      Change in unrealized gain on
       available for sale
       securities, net of     
       reclassification amount                                                           9,655
                                                                                       -------
Total comprehensive loss                                                                               (72,323)
Conversion of subordinated notes         20                  33,264                                     33,284
Issuance of common stock                 17                  40,402                                     40,419
                                      -----      ----      --------      --------      -------        --------
Balance at September 30, 1998         $ 414      $  7      $310,143      $170,022      $26,807        $507,393
                                      =====      ====      ========      ========      =======        ========
</TABLE>

See accompanying notes

                                      5

<PAGE>

                FIRSTPLUS FINANCIAL GROUP, INC. AND SUBSIDIARIES
       UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                             Accumulated
                                             Common    Common                                  other
                                             stock,    stock,    Additional    Retained     comprehensive
                                             voting  non-voting    capital     earnings         income       Total
                                             ------  ----------  ----------    ---------    --------------  ---------
<S>                                          <C>     <C>         <C>           <C>          <C>             <C>
Balance at December 31, 1996                  $ 256     $ 44      $ 88,379      $ 69,511      $   (63)       $158,127
Acquisition                                      11                  2,781        (2,617)                         175
Comprehensive income, net of tax:
   Net income                                                                     30,551
   Other comprehensive income:
      Change in unrealized gain on
       available for sale securities, net                                                       7,171
                                                                                              -------
       of reclassification amount
Total comprehensive income                                                                                     37,722
Conversion of non-voting to voting               16      (16)                                                       -
Issuance of common stock                         42                123,253                                    123,295
                                              -----     ----      --------      --------      -------        --------
Balance at March 31, 1997                       325       28       214,413        97,445        7,108         319,319
Acquisition                                       3                    276         3,127                        3,406
Comprehensive income, net of tax:
   Net income                                                                     39,374
   Other comprehensive income:
      Change in unrealized gain on
       available for sale securities, net
       of reclassification amount                                                               6,905
                                                                                              -------
Total comprehensive income                                                                                     46,279
Conversion of non-voting to voting               21      (21)                                                       -
Issuance of common stock                          1                   (795)                                      (794)
                                              -----     ----      --------      --------      -------        --------
Balance at June 30, 1997                        350        7       213,894       139,946       14,013         368,210
Acquisition                                      15                  1,802         3,084                        4,901
Comprehensive income, net of tax:
   Net income                                                                     49,608
   Other comprehensive income:
      Change in unrealized gain on
       available for sale securities, net
       of reclassification amount                                                               6,240
                                                                                              -------
Total comprehensive income                                                                                     55,848
Issuance of common stock                          1                  1,185                                      1,186
                                              -----     ----      --------      --------      -------        --------
Balance at September 30, 1997                 $ 366     $  7      $216,881      $192,638      $20,253        $430,145
                                              =====     ====      ========      ========      =======        ========
</TABLE>


See accompanying notes

                                      6

<PAGE>

                FIRSTPLUS FINANCIAL GROUP, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                           Nine Months Ended
                                                                              September 30,
                                                                  -------------------------------
                                                                      1998                1997
                                                                  -----------         -----------
<S>                                                               <C>                 <C>
OPERATING ACTIVITIES:
   Net (loss)/income                                              $   (34,293)        $   119,533
   Adjustments to reconcile net (loss)/income to net cash
     used in operating activities:
     Provision for possible credit losses                              56,076              40,035
     Depreciation and amortization                                      7,878               3,091
     Gain on sales of loans                                          (135,508)           (262,064)
     Lower of cost or market and fair value adjustments                58,115                   -
     Restructuring charges                                             36,209                   -
     Changes in operating assets and liabilities:
      Loans originated or acquired                                 (4,210,170)         (3,505,071)
      Principal collected and proceeds from sale of loans           4,032,151           2,721,259
      Interest only strip and servicing asset amortization            172,833              61,271
      I/O Strip and servicing asset, net                             (168,569)           (106,339)
      Subordinated certificates held for sale                         (18,847)                  -
      Receivable from trusts                                         (127,371)            (88,604)
      Other assets                                                    (17,118)            (10,120)
      Accounts payable and accrued expenses                            41,703              21,051
      Deferred tax liability                                           (6,869)             70,228
      Other                                                             7,507               5,723
                                                                  -----------         -----------
NET CASH USED IN OPERATING ACTIVITIES                                (306,273)           (930,007)

INVESTING ACTIVITIES:
  Cash paid for acquisitions                                          (21,877)                  -
  Cash from acquisitions                                                    -               3,071
  Purchases of available for sale securities                          (25,774)            (58,502)
  Proceeds from sale of available for sale securities                  25,839              84,499
  Purchases of equipment and leasehold improvements                   (32,092)            (19,338)
  Other                                                                     -               4,769
                                                                  -----------         -----------
NET CASH (USED IN)/PROVIDED BY
   INVESTING ACTIVITIES                                               (53,904)             14,499

FINANCING ACTIVITIES:
  Borrowings on warehouse financing facilities, net                   232,621             564,853
  (Repayments)/borrowings on term lines of credit, net                (16,077)            109,552
  Borrowings on notes payable, net                                        749               3,459
  Borrowings on bonds                                                 146,320             174,088
  Payments on bonds payable                                          (175,455)                  -
  Net change in time deposits                                         128,626              13,114
  Issuance of common stock                                             57,573             125,358
  Other                                                                     -                  23
                                                                  -----------         -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                             374,357             990,447
                                                                  -----------         -----------

INCREASE IN CASH                                                       14,180              74,939
  Cash and cash equivalents at beginning of period                     59,524              20,039
                                                                  -----------         -----------
  Cash and cash equivalents at end of period                      $    73,704          $   94,978
                                                                  ===========          ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest paid during the period                                 $   118,481          $   82,215
                                                                  ===========          ==========
</TABLE>

See accompanying notes

                                      7
<PAGE>
                FIRSTPLUS FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)

1.  BASIS OF PRESENTATION

      The accompanying unaudited consolidated financial statements have been 
prepared in accordance with generally accepted accounting principles for 
interim financial information and with the instructions to Form 10-Q and 
Article 10 of Regulation S-X. Accordingly, they do not include all of the 
information and footnotes required by generally accepted accounting 
principles for complete financial statements. In the opinion of management, 
all adjustments (consisting of normal recurring accruals) considered 
necessary for a fair presentation have been included. Operating results for 
the three-month and nine-month periods ended September 30, 1998 are not 
necessarily indicative of the results that may be expected for a full year. 
For further information, refer to the consolidated financial statements and 
footnotes thereto for the year ended September 30, 1997 included in FIRSTPLUS 
Financial Group, Inc.'s 1997 Annual Report filed with the Securities and 
Exchange Commission on Form 10-K.

      On December 15, 1997, the Board of Directors of FIRSTPLUS Financial 
Group, Inc. (the "Company" or "FIRSTPLUS") approved a change in the Company's 
fiscal year end from September 30 to December 31, to be effective beginning 
January 1, 1998. Accordingly, this Quarterly Report on Form 10-Q represents 
the third quarter of the Company's new fiscal year.

      On October 23, 1998, the FASB issued a draft guide, in question and 
answer format, entitled: "A Guide to Implementation of Statement 125 on 
Accounting for Transfers and Servicing of Financial Assets and 
Extinguishments of Liabilities, Questions and Answers, Second Edition" (the 
"draft Q&A"). The draft Q&A indicates that two methods have arisen in 
practice for accounting for credit enhancements, items which the Company 
records as I/O Strips and receivable from trust. These methods are the 
cash-in method and the cash-out method. The cash-in method treats credit 
enhancements (pledged loans or cash) as belonging to the Company. As such, 
the receivable from trust is recorded at face value. The cash-out method 
treats credit enhancements as assets owned by the related securitization 
trusts. As such, the receivable from trust cash flows are treated as part of 
the I/O Strip and the combined I/O Strip and the receivable from trust cash 
flows are recorded at a discounted value for the period between when the cash 
is collected by the trust and released to the Company. The draft Q&A 
indicates that the cash-out method should be used to measure the fair value 
of credit enhancements, including subordinated I/O Strips. The draft Q&A 
remains subject to a comment period and further amendments prior to becoming 
effective and applicable to the Company in its final form.

      The Company has historically used the cash-in method to account for its 
I/O Strips and receivable from trust. Management has not determined the ultimate
impact the adoption of this draft Q&A will have, but believes it will be 
material to the Company.

2.  LOANS HELD FOR SALE, NET

Loans held for sale, net consist of the following:

<TABLE>
<CAPTION>
                                                          September 30,
                                                 -----------------------------
                                                    1998               1997
                                                 ----------         ----------
<S>                                              <C>                <C>
High LTV Loans                                   $1,713,151         $1,310,576
Personal consumer                                   145,461             93,172
Conforming first lien mortgages                      23,228             16,488
B/C loans                                            80,287                  -
Other                                                41,080             14,581
                                                 ----------          ---------
      Subtotal                                    2,003,207          1,434,817
Allowance for possible credit losses                (26,433)           (31,539)
Deferred finance charges                            (26,436)           (16,568)
Valuation allowance                                 (42,188)                 -
(Discounts)/premiums, net                            (6,024)            13,736
                                                 ----------         ----------
      Total                                      $1,902,126         $1,400,446
                                                 ==========         ==========
</TABLE>

                                      8

<PAGE>

                FIRSTPLUS FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)

3.  INTEREST ONLY STRIPS, NET

The activity in the Interest Only Strips (net of allowance for possible losses
on loans sold) is summarized as follows:

<TABLE>
<CAPTION>
                                                    Nine Months          Year
                                                      Ended             Ended
                                                   September 30,     September 30,
                                                      1998               1997
                                                  --------------     ------------
<S>                                               <C>                <C>
Balance, beginning of period                      $  482,271          $ 132,973
I/O Strips created from securitizations during
      the period                                     486,635            608,548
Impairment of I/O Strips                             (43,085)                 -
Unrealized gains, net                                  9,709                  -
Provision for possible losses on loans sold         (336,940)          (245,796)
Amortization                                        (166,564)           (61,707)
Charge-offs, net                                      98,933             23,866
Other                                                 (1,118)            (1,761)
                                                  ----------          ---------
Balance, end of period                            $  529,841          $ 456,123
                                                  ==========          =========
</TABLE>

4.  EARNINGS PER SHARE

The table below sets forth the computation of basic and diluted (loss)/earnings
per share:

<TABLE>
<CAPTION>
                                                                  Three Months Ended      Nine Months Ended
                                                                     September 30,          September 30,
                                                                  --------------------    -----------------
                                                                    1998        1997        1998         1997
                                                                    ----        ----        ----         ----
<S>                                                               <C>          <C>         <C>         <C>
Numerator:
  Numerator for basic (loss)/earnings per share -
     (loss)/income available to common stockholders
     (net (loss)/income)                                          $(81,978)    $49,608     $(34,293)    $119,533

  Effect of dilutive securities:
     Additional interest on convertible subordinated
         notes, net of tax                                               -         792            -        2,375
                                                                  --------     -------     --------     --------
  Numerator for diluted (loss)/earnings per
     share-(loss)/income available to common stockholders
     after assumed conversions                                    $(81,978)    $50,400     $(34,293)    $121,908
                                                                  ========     =======     ========     ========

Denominator:
  Denominator for basic (loss)/earnings per share -
     weighted average shares                                        39,651      37,172       38,567       35,616
  Effect of dilutive securities:
     Employee stock options                                              -       1,888            -        1,109
     Convertible subordinated notes                                      -       4,290            -        4,290
                                                                  --------     -------     --------     --------
  Dilutive potential common shares                                       -       6,178            -        5,399
                                                                  --------     -------     --------     --------
Denominator for diluted (loss)/earnings per share-adjusted
     weighted average shares and assumed conversions                39,651      43,350       38,567       41,015
                                                                  ========     =======     ========     ========
Basic (loss)/earnings per share                                   $  (2.07)    $  1.33     $  (0.89)    $   3.36
                                                                  ========     =======     ========     ========
Diluted (loss)/earnings per share                                 $  (2.07)    $  1.16     $  (0.89)    $   2.97
                                                                  ========     =======     =========    ========
</TABLE>

                                      9

<PAGE>

                FIRSTPLUS FINANCIAL GROUP, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)

5.  DEBT

     The Company's warehouse facilities have either reached capacity, have 
been curtailed or will reach contractual maturities in the December 1998 
quarter. The Company is currently in negotiations with its banks and 
investment banks to reopen and extend the contractual maturities of certain 
funding facilities. As part of these negotiations, the Company is required to 
complete the proposed sale of its servicing operations to Superior Bank FSB. 
If the Company is unable to find additional capacity under these facilities 
through either whole loan sales or a securitization, or is unable to secure a 
new source of funding, it could have a material adverse effect on the 
Company's results of operations and financial condition.

     The Company has also requested that its banks and investment banks 
establish a three-year term principal paydown schedule for certain of its 
term line facilities, which is also contingent upon the loan servicing sale.

     In addition, the Company's largest repurchase facility is up for renewal 
in December 1998. As part of the negotiations with the lender, two provisions 
of the repurchase agreement have been changed. First, the facility has been 
changed from a committed facility to an uncommitted facility. Second, the 
minimum required market capitalization of the Company has been changed from 
$750.0 million to $100.0 million until the renewal date. There can be no 
assurances that the facility will be renewed or will not be materially 
modified or reduced in size.

     Management believes that the negotiations with its banks and investment 
banks will be successful, although there can be no assurance that such 
negotiations will be successful. Should the Company not be successful in 
these negotiations, the Company may lose the right to repurchase its loans 
held for sale, certain I/O Strips, receivable from trust and other assets 
pledged as collateral for these facilities and may be unable to continue 
funding its operations. In such an event, the banks and investment banks may 
elect to retain the encumbered assets at a value potentially below the 
carrying values recorded on the Company's balance sheet as of September 30, 
1998.

6.  RESTRUCTURING

      During September 1998, the Company finalized and adopted a plan to 
significantly restructure its operations. The restructuring is designed to 
reduce corporate overhead and to focus the Company's capital resources on its 
direct to consumer loan origination channels, while curtailing or selling 
other lines of business. The Company announced the restructuring program in 
October 1998, which resulted in an immediate work force reduction of 
approximately 1,700 employees and the closure of certain operations. The 
Company recorded a pre-tax charge of $33.0 million in the third quarter 
relating to writing down the value of leasehold improvements, closing 
facilities, and writing down the value of assets associated with exited 
businesses. The Company publicly announced its restructuring plan and 
notified impacted employee groups in October 1998. Accordingly, 
severance-related charges, presently estimated at $10.0 million, pre-tax, 
will be recorded during the December 1998 quarter. A further reduction of an 
additional 1,300 employees is expected as the servicing operations and other 
operations are sold or curtailed. 

7.  SUBSEQUENT EVENTS

      STRATEGIC ALLIANCE

      On October 15, 1998, the Company announced a strategic alliance with 
Coast-To-Coast Financial Corporation ("CCFC") and certain related entities. 
The strategic alliance includes the sale of the Company's servicing rights 
and servicing operations, the formation of a joint venture to facilitate 
future securitizations, a fee-based advisory agreement and the issuance of 
warrants to purchase 20,000,000 shares of the Company's common stock at 
$4.625 per share. The execution of the strategic alliance is subject to 
certain closing conditions.

     BRIDGE LOAN FROM CCFC

     On October 16, 1998, the Company received a $15.0 million bridge loan 
from CCFC, which pays interest at a rate of prime plus 1.0%. Originally, the 
bridge loan was due 30 days from issuance. As part of the negotiations for 
the sale of the servicing operations, the Company and CCFC are negotiating 
the extension of the term of the bridge loan. If the closing is significantly 
delayed, CCFC, at its sole discretion, may call the note due immediately. As 
collateral for the bridge loan, the Company pledged to CCFC a security 
interest in FIRSTPLUS Bank.

      SALE OF UNITED KINGDOM OPERATIONS

      On October 20, 1998, the Company closed the sale of its United Kingdom 
loan origination and servicing operations based in Cardiff, Wales. The sale 
generated cash in excess of $13.0 million and resulted in the Company 
recording an approximate $700,000 loss.

      LITIGATION

      Several lawsuits have been filed against the Company and certain of its 
officers and directors. The complaints allege violations of the securities 
laws through false and misleading statements and seek class action status. 
The Company intends to vigorously defend such lawsuits.

      Other lawsuits have been filed, within the September 1998 quarter, 
against the Company by certain borrowers and former employees, alleging 
violations of federal statutes, including violations of the Fair Labor 
Standards Act, Real Estate Settlement Act, Truth in Lending Act, as well as 
claims relating to breach of contract and wage-related issues.  The Company 
intends to vigorously defend such lawsuits.

      ACQUISITION OF LIFE FINANCIAL CORP.

      On October 12, 1998, LIFE Financial Corp. terminated the agreement and 
plan of merger between itself and the Company. Subsequent to this action, 
LIFE Financial Corp. filed suit against the Company seeking damages. The 
Company believes the suit is without merit and intends to vigorously defend 
the suit.

                                      10

<PAGE>

Item 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

      FIRSTPLUS Financial Group, Inc. (together with its subsidiaries, the 
"Company" or "FIRSTPLUS") is a specialized consumer finance company that 
originates, purchases, services and sells consumer loans. Historically, the 
Company's consumer loan products have been debt consolidation or home 
improvement loans secured by first or second liens on residential real 
property ("High LTV Loans"), non-conforming home equity loans ("B/C Loans"), 
conforming first lien loans, and personal consumer loans. The Company sells 
substantially all of its High LTV Loans through its securitization program 
and retains rights to service these loans.

      The following analysis of the financial condition and results of 
operations of the Company should be read in conjunction with the Company's 
Annual Report filed with the Securities and Exchange Commission on Form 10-K, 
including the consolidated financial statements and notes thereto.

STRATEGIC ALLIANCE AND RESTRUCTURING

      On October 15, 1998, the Company announced a strategic alliance with 
Coast-To-Coast Financial Corporation ("CCFC") and certain related entities, 
which is subject to certain closing conditions that are not yet complete 
(the "Stategic Alliance").  The Strategic Alliance would have four key elements:

      -   Superior Bank FSB ("Superior"), a wholly owned subsidiary of CCFC,
          has committed, subject to certain closing conditions, to purchase the
          servicing rights to FIRSTPLUS' servicing portfolio and the loan
          servicing operations. Following the close of the sale, Superior will
          be engaged as loan servicer on all consumer loans originated by
          FIRSTPLUS. The closing conditions include the consent and/or approval
          of the Company's securitization bond insurer and trustees and consent
          of its banks and investment banks.

      -   CCFC and the Company will form a joint venture to facilitate
          securitizations of the Company's High LTV Loans. As part of future
          securitization transactions executed by the joint venture, CCFC will
          use its best efforts to arrange for funds, based on feasibility, 
          necessary for overcollateralization and other credit enhancement. The 
          Company will provide the consumer loans. CCFC will receive a 
          preferential return on the funds contributed. Subsequent to CCFC's 
          preferential disbursement, the Company will receive a preferential 
          return up to two percent of the par value of loans delivered. All 
          remaining cash flows from the joint venture will be distributed 51% 
          to CCFC and 49% to the Company.

      -   The Company and CCFC will enter into an advisory agreement, whereby
          CCFC will advise the Company and the Board of Directors regarding the
          evaluation and development of its ongoing business plan as well as
          securitization and whole loan sale activities. As compensation for
          providing this service, CCFC will receive a quarterly fee of 15 basis
          points of consumer loans originated by FIRSTPLUS, subject to a minimum
          fee of $1,000,000.

      -   As consideration for implementing the Strategic Alliance, CCFC will
          be issued warrants to purchase 20,000,000 FIRSTPLUS shares at a strike
          price of $4.625.

      In connection with the announcement of the Strategic Alliance, the Company
announced a restructuring of its operations. During September 1998, the Company
finalized and adopted a plan to significantly restructure its operations. The
restructuring is designed to reduce corporate overhead and to focus the
Company's capital resources on its direct to consumer loan origination channels,
while curtailing or selling other lines of business. Specifically, the Company
will or has curtailed or exited the following:

      -   FIRSTPLUS U.K. was sold on October 20, 1998;

      -   FIRSTPLUS Consumer Finance Company is being marketed for sale;

      -   The conforming first lien loan branches are being marketed for sale;

      -   The correspondent division of FIRSTPLUS has been curtailed;

      -   The FIRSTPLUS Direct call center and loan origination network has been
          relocated to the Dallas call center, although the direct mail
          operation will remain in California and work in coordination with the
          Dallas call center;

      -   Approximately 15 retail branches have been closed; and

      -   A significant number of corporate positions have been eliminated.

                                      11

<PAGE>

      As a result of the Strategic Alliance and the restructuring, the Company's
future financial results will be materially affected. With the curtailing or
selling of certain business lines, future loan originations will be
substantially reduced from prior production levels. The potential impact of the
Strategic Alliance and the restructuring on certain revenue and expense items
are as follows:

      -   Gain on securitized loan sales - Due to the sharing of economics with
          the joint venture partner, future gain on securitized loan sales will
          be significantly reduced from prior results;

      -   Interest income and interest expense (Net Interest Income) - Net
          interest income will be reduced due to expected lower production
          levels and an expected higher percentage of sold loans to loan
          originations;

      -   Servicing Income - The servicing rights will be sold on all existing
          and future consumer loan production; therefore, although there will
          continue to be gains from sale of servicing rights, there will be a
          significant reduction in future servicing income; and

      -   Operating costs - Due to the reduction in work force, elimination or
          curtailment at certain facilities, the Company's operating costs will
          be substantially decreased.

FINANCIAL CONDITION
   SEPTEMBER 30, 1998

      Loans held for sale increased to $1.9 billion at September 30, 1998,
compared to $1.6 billion at September 30, 1997. The increase can be attributed
to the Company's inability to securitize approximately $500.0 million in High
LTV Loans during September 1998, as more fully discussed in "- Results of
Operations." During the nine months ended September 30, 1998, the Company
originated $4.2 billion, securitized $2.8 billion, and sold $1.1 billion, on a
whole loan basis, of consumer loans.

      Management makes estimates and assumptions regarding the value of the
interest only strips ("I/O Strips") at the time of each securitization and at
each subsequent balance sheet date. The primary assumptions used to estimate the
value of the I/O Strips are default and prepayment rates, along with an
appropriate discount rate. The prepayment and default rates are estimated based
on analysis of past experience and expectations for future performance. The
combined prepayment and default assumptions were increased during the September
1998 quarter based on management's assessment of recent prepayment and loss
experience. The discount rate is determined based on the securitization
structure, the over-collateralization levels, interest rate fluctuations and
market volatility. Such assumptions represent management's best estimate based
upon current conditions. Increased competition, continued periods of low
interest rates, general economic conditions and other factors such as the risks
and uncertainties described in the Company's Current Report on Form 8-K, dated
December 19, 1996, could result in actual performance differing materially from
those estimates.

      The Company's I/O Strips increased to $529.8 million at September 30,
1998, compared to $456.1 million at September 30, 1997, an increase of $73.7
million or 16.2%. As of September 30, 1998, the Company recorded a $27.0 million
net decrease in the fair value of its I/O Strips. This adjustment consists of a
$43.1 million other than temporary impairment on four of the Company's older I/O
Strips, recorded in the income statement, and $16.1 million of unrealized losses
removed from the valuation allowance for unrealized gains and losses on I/O
Strips, which is recorded as part of stockholders' equity. Additional I/O Strip
activity includes the recognition of the fair value of the I/O Strips from
securitizations completed during the period, offset by amortization. As of
September 30, 1998, the carrying value of the recorded I/O Strips reflects their
estimated fair value.

      Total stockholders' equity at September 30, 1998 was $507.4 million,
compared to $430.1 million at September 30, 1997, an increase of $77.3 million
or 18.0%. During the nine months ended September 30, 1998, the Company reported
a total comprehensive loss of $26.7 million. The Company has issued
approximately $57.5 million of common stock during the nine-month period ended
September 30, 1998. In August 1998, holders of $31.4 million of its convertible
subordinated notes converted those notes into equity. As compensation for the
early extinguishment of the notes, the holders received an additional $1.8
million in common stock.

                                      12
<PAGE>

RESULTS OF OPERATIONS

     THREE MONTHS ENDED SEPTEMBER 30, 1998 VERSUS THREE MONTHS ENDED
     SEPTEMBER 30, 1997

      The Company's total revenues were flat at $208.4 million during its 
September 1998 quarter, compared to its September 1997 quarter. Total revenue 
was largely affected by the gain on securitized loan sales, net, which 
decreased by $70.3 million or 76.6%. This decrease was offset by increases in 
almost all other revenue categories, most notably interest income on loans 
held for sale and I/O Strips, origination income and servicing income.

      Gain on securitized loan sales, net, decreased to $21.5 million in the 
September 1998 quarter, compared to $91.8 million in the September 1997 
quarter, a decrease of $70.3 million or 76.6%. Gain on securitized loan 
sales, net, in each quarter was affected by both the size of the 
securitizations and changes in assumptions used in the valuation of the I/O 
Strips.  Such changes in assumptions were reflective of changes in the market 
for related securities, as well as collateral performance.  During the 
September 1998 quarter, the Company securitized $672.0 million of High LTV 
Loans, compared to $833.4 million in the September 1997 quarter. The Company 
was unable to complete a planned $500.0 million High LTV Loan securitization 
due to the Company's inability to fund an increased initial 
overcollateralization deposit, which were not required in FIRSTPLUS' 
securitization program since March 1997, including its August 1998 
securitization. This increase in required initial overcollateralization 
levels are a result of the unsettled nature of the asset-backed and other 
capital markets as a whole.

      During the September 1998 quarter, the Company used a discount rate of 
approximately 19.46% to value its I/O Strips, taking into account all cash 
flows that will revert to the Company, from its securitizations completed 
during the September 1998 quarter. The resulting gain on securitized loan 
sales, net, as a percentage of the loans securitized and sold was 3.2% and 
11.0% for the quarters ended September 30, 1998 and 1997, respectively. Other 
assumptions used in assessing the fair value of the I/O Strips created during 
the September 1998 quarter included an all-in proprietary prepayment curve 
reaching an approximate 20% CPR in month 18, including proprietary default 
curves (resulting in an involuntary prepayment curve of 4.15%).

      Interest income increased to $74.8 million in the September 1998 
quarter, compared to $65.2 million in the September 1997 quarter, an increase 
of $9.6 million or 14.7%. The increase in interest income was primarily 
attributable to an increase in the average loans held for sale balance. Loans 
held for sale as of September 30, 1998 were $1.9 billion, compared to $1.6 
billion at September 30, 1997.

      Interest income on the Company's I/O Strips increased to $30.0 million 
in the quarter ended September 30, 1998, compared to $13.0 million in the 
quarter ended September 30, 1997, an increase of $17.0 million or 130.8%. 
This increase was the result of the Company's larger average I/O Strip 
balance during the September 30, 1998 quarter and an increased yield. I/O 
Strips as of September 30, 1998 were $529.8 million, compared to $456.1 
million as of September 30, 1997.

      Origination income increased to $47.1 million in the quarter ended 
September 30, 1998, compared to $16.0 million in the quarter ended September 
30, 1997, an increase of $31.1 million or 194.4%. This increase was the 
result of the Company's continuing shift toward direct to consumer 
originations, which accounted for 59.6% of High LTV Loan originations, 
compared to 26.5% a year earlier. Origination fees are deferred when collected
and subsequently recognized when the loans are sold. The Company collected 
and deferred approximately $52.3 million of loan origination fees during the 
September 1998 quarter.

      Servicing income increased to $14.7 million in the quarter ended 
September 30, 1998, compared to $7.8 million in the quarter ended September 
30, 1997, an increase of $6.9 million or 88.5%. This increase was primarily a 
result of the increase in the Company's securitized loan portfolio, which 
increased to $6.0 billion at September 30, 1998, compared to $3.1 billion at 
September 30, 1997.

      Total pre-tax operating expenses, which include salaries, employee 
benefits, advertising, marketing, servicing and other operating expenses, 
increased to $140.0 million in the quarter ended September 30, 1998, compared 
to $82.1 million in the quarter ended September 30, 1997, an increase of 
$57.9 million or 70.5%. The increase in operating expenses during the quarter 
ended September 30, 1998, was due to marketing personnel and infrastructure 
costs associated with the Company's continued efforts to significantly 
increase its High LTV and B/C direct to consumer lending platforms.

                                      13
<PAGE>

      Interest expense for the quarter ended September 30, 1998 increased to 
$40.3 million, compared to $31.7 million for the quarter ended September 30, 
1997, an increase of $8.6 million or 27.1%. The increase primarily related to 
the Company's overall increase in the warehouse facilities and term line 
borrowings, which supported both loan volume growth and expanding operations.

      The Company's provision for possible credit losses on loans held for 
sale increased to $22.9 million for the quarter ended September 30, 1998, 
compared to $14.3 million for the quarter ended September 30, 1997, an 
increase of $8.6 million or 60.1%. The 30-day and over delinquency rate for 
the managed loans portfolio of 2.6% as of September 30, 1998 increased 
to 2.5% as of September 30, 1997. Gross servicing portfolio defaults, before 
recoveries and insurance recoveries received on Title I loans, equaled $46.6 
million or 0.60% of the September 30, 1998 average quarterly loan portfolio.

      In addition to the $43.1 million impairment of I/O Strips, the Company 
recorded $58.1 million in lower of cost or market and fair value adjustments 
related to its loans held for sale portfolio, certain retained certificates 
representing interests in loans and certain servicing assets. The secondary 
market for the Company's consumer loans decreased in September 1998, such 
that the fair value was less than the carrying value. The adjustments 
principally related to the Company's wholesale loans generated by the 
correspondent division. The servicing asset was adjusted based on the 
proposed terms of the Strategic Alliance.

      The Company recorded significant charges related to the restructuring 
of its operation and the conversion of its convertible subordinated notes 
totalling $36.2 million in the quarter ended September 30, 1998. The 
restructuring plan resulted in an immediate work force reduction of 
approximately 1,700 employees and the closure of certain operations. 
Accordingly, the Company recorded a charge of $33.0 million in the quarter 
ended September 30, 1998 relating to writing down the value of leasehold 
improvements, closing facilities, and writing down the value of assets 
associated with exited businesses. The Company publicly announced its 
restructuring plan and notified impacted employee groups in October 1998. 
Accordingly, severance-related charges, presently estimated at $10.0 million, 
pre-tax, will be recorded during the December 1998 quarter.

NINE MONTHS ENDED SEPTEMBER 30, 1998 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 1997

      The Company's total revenues increased to $609.3 million during the 
nine months ended September 1998, compared to $500.6 million in the nine 
months ended September 30, 1997, an increase of $108.7 million or 21.7%. 
During the nine months ended September 30, 1998, the Company's percentage of 
revenue other than gain on securitized loan sales increased to 82.5%, 
compared to 52.4% in the nine months ended September 30, 1997. The increase 
is related to the growth of the Company's loan portfolio and direct to 
consumer loan originations.

      Gain on securitized loan sales, net, decreased to $107.0 million in the 
nine months ended September 30, 1998, compared to $238.3 million in the nine 
months ended September 30, 1997, a decrease of $131.3 million or 55.1%. Gain 
on securitized loan sales, net, in the nine-month period was affected by both 
the size of the securitizations and changes in assumptions used in the 
valuation of the I/O Strips. Such changes in assumptions were reflective 
of changes in the market for related securities, as well as collateral 
performance. During the nine months ended September 30, 1998, the Company 
securitized almost $3.0 billion of High LTV Loans, compared to $2.0 billion 
in the nine months ended September 30, 1997. The resulting gain on 
securitized loan sales, net, as a percentage of the loans securitized and 
sold was 3.4% and 11.9% for the nine months ended September 30, 1998 and 
1997, respectively.

      Interest income increased to $217.6 million in the nine months ended 
September 30, 1998, compared to $150.3 million in the nine months ended 
September 30, 1997, an increase of $67.3 million or 44.8%. The increase in 
interest income was primarily attributable to an increase in the average 
loans held for sale balance. Loans held for sale as of September 30, 1998 
were $1.9 billion, compared to $1.6 billion as of September 30, 1997.

      Interest income on the Company's I/O Strips increased to $78.7 million 
in the nine months ended September 30, 1998, compared to $24.2 million in the 
nine months ended September 30, 1997, an increase of $54.5 million or 225.2%. 
This increase was primarily the result of the Company's larger average I/O 
Strip balance and an increased yield during the nine months ended September 
30, 1998. I/O Strips as of September 30, 1998 were $529.8 million, compared 
to $456.1 million as of September 30, 1997.

      Origination income increased to $122.3 million in the nine months ended 
September 30, 1998, compared to $37.8 million in the nine months ended 
September 30, 1997, an increase of $84.5 million or 223.5%. The increase was 
the result of the Company's increasing direct to consumer loan originations.

                                      14

<PAGE>

      Servicing income increased to $38.6 million in the nine months ended 
September 30, 1998, compared to $17.8 million in the nine months ended 
September 30, 1997, an increase of $20.8 million or 116.9%. This increase was 
a result of the increase in the Company's securitized loan portfolio, which 
increased to $6.0 billion at September 30, 1998, compared to $3.1 billion at 
September 30, 1997.

      Total pre-tax operating expenses, which include salaries, employee 
benefits, advertising, marketing, servicing and other operating expenses, 
increased to $357.5 million in the nine months ended September 30, 1998, 
compared to $188.9 million in the nine months ended September 30, 1997, an 
increase of $168.6 million or 89.3%. The increase in operating expenses 
during the nine months ended September 30, 1998, was due to marketing costs 
associated with the Company's continued efforts to significantly increase its 
High LTV and B/C direct to consumer lending platforms, its originations 
from its direct to consumer lending division, professional fees primarily 
associated with improving its information technology and increases in 
servicing-related personnel.

      Interest expense for the nine months ended September 30, 1998 increased 
to $113.7 million, compared to $78.8 million for the nine months ended 
September 30, 1997, an increase of $34.9 million or 44.3%. The increase 
primarily related to the Company's overall increase in the warehouse and 
repurchase facilities and term line borrowings, which supported both loan 
volume growth and expanding operations.

      The Company's provision for possible credit losses on loans held for 
sale increased to $56.1 million for the nine months ended September 30, 1998, 
compared to $40.0 million for the nine months ended September 30, 1997, an 
increase of $16.1 million or 40.3%. The increase is the result of an 
increased loans held for sale portfolio.

LIQUIDITY AND CAPITAL RESOURCES

      The Company's operations require continued access to financing sources. 
The Company's primary operating cash requirements include the funding of (i) 
loan originations and purchases, (ii) fees and expenses incurred in 
connection with its securitization transactions, (iii) television, radio and 
direct mail advertising and other marketing, (iv) capital expenditures on 
equipment and leasehold improvements, and (v) administrative and other 
operating expenses.

      Historically, the Company has utilized its securitization program and 
repurchase agreements with banks and investment banks as its two main sources 
to finance its operations. The repurchase agreements allow the Company to 
borrow against its loans (commonly known as a warehouse facility) and I/O 
Strips and receivable from trust (known as term line facilities). Adequate 
credit facilities and other sources of funding, which permit the Company to 
fund its operating cash requirements and to securitize or sell loans in the 
secondary market, are essential for the continuation of the Company's ability 
to originate and purchase loans. After utilizing available working capital, 
the Company borrows on its warehouse agreements to fund its loan originations 
and purchases and repays these borrowings as the loans are repaid or sold. 
Upon the securitization or sale of loans and the subsequent repayment of the 
borrowings, the Company's working capital and warehouse facilities again 
become available to fund additional loan originations and purchases.

      As of September 30, 1998, the Company had $1.6 billion outstanding on 
warehouse facilities. The terms of the warehouse agreements allow the loans 
to remain in the facilities before the Company is required to repurchase the 
loans for periods that range from 90 to 330 days. Historically, the Company 
met these obligations by obtaining permanent funding for these loans through 
its securitization program. However, during September 1998 and continuing 
into October and November 1998, the Company and certain other asset-backed 
and mortgage-backed securitizors experienced significant reductions in 
liquidity due to the inability to complete securitizations. Hedge funds, some 
of which were significant buyers of asset-backed and mortgage-backed 
investments, were required by their lenders to liquidate substantial portions 
of their portfolios, thereby creating an overabundance of supply and, 
simultaneously, a reduced demand for asset-backed and mortgage-backed 
investments. The Company expects that any securitizations in the foreseeable 
future will require substantial initial overcollateralization levels. 
As part of the Strategic Alliance, CCFC would be expected to arrange for,
on a best efforts basis, any required initial overcollateralization levels 
along with any required insurance.

      Currently, the Company has not been able to find permanent financing 
or, alternatively, find a buyer for its consumer loans. Therefore, the 
warehouse facilities have either reached capacity, have been curtailed or 
will reach contractual maturities in the December 1998 quarter. The current 
capacity under its warehouse facilities that support its High LTV and B/C 
loan products is approximately $110.0 million, with approximately $25.0 
million specifically relating to High LTV capacity. Although the Company has 
capacity under its facilities, the use of these facilities is restricted or 
limited. Specifically, the advance rate on some of the facilities is below 
par, which requires the Company to fund portions of loan originations from 
other sources. Because the Company currently funds its loan originations and 
operations with these 

                                      15
<PAGE>

facilities, their restricted use has caused the Company to experience severe 
liquidity shortages. As a result of these liquidity concerns, the Company may 
seek to complete large whole loan sales of its High LTV Loan product. During 
the September 1998 quarter, the Company sold $200.0 million of High LTV Loans 
on a whole loan basis. The Company is currently in negotiations with its 
banks and investment banks to reopen and extend the contractual maturities of 
certain funding facilities. As part of these negotiations, the Company is 
required to complete the sale of its servicing operations to Superior. If the 
Company is unable to find additional capacity under these facilities through 
either whole loan sales or a securitization, or is unable to secure a new 
source of funding, it could have a material adverse effect on the Company's 
results of operations and financial condition.

     In addition, the Company's largest repurchase facility is up for renewal 
in December 1998. As part of the negotiations with the lender, two provisions 
of the repurchase agreement have been changed. First, the facility has been 
changed from a committed facility to an uncommitted facility. Second, the 
minimum required market capitalization of the Company has been changed from 
$750.0 million to $100.0 million until the renewal date. There can be no 
assurances that the facility will be renewed or that it will not be materially
modified or reduced in size. If the facility is not renewed or is materially 
modified, the Company may need to seek additional sources of funding to 
support its future loan originations.

      As of September 30, 1998, the Company had $189.4 million outstanding 
under term line facilities. The borrowings from these facilities were 
generally used to cover securitization and operating costs. Upon the 
completion of a securitization, the Company borrowed against an agreed upon 
value of the I/O Strips and receivable from trust. The Company has not 
completed a securitization since August 1998. Therefore, it has not been able 
to increase the borrowing base nor has it been able to borrow additional 
funds. The Company has also requested that its banks and investment banks 
establish a three-year term principal paydown schedule for certain of its 
term line facilities, which is also contingent upon the loan servicing sale.

      Management believes that the negotiations with its banks and investment 
banks will be successful, although there can be no assurance that such 
negotiations will be successful. Should the Company not be successful in 
these negotiations, the Company may lose the right to repurchase its loans 
held for sale, certain I/O Strips, receivable from trust and other assets 
pledged as collateral for these facilities and may be unable to continue 
funding its operations. In such an event, the banks and investment banks may 
elect to retain the encumbered assets at a value potentially below the 
carrying values recorded on the Company's balance sheet as of September 30, 
1998.

     On October 16, 1998, the Company received a $15.0 million bridge loan 
from CCFC, which pays interest at a rate of prime plus 1.0%. Originally, the 
bridge loan was due 30 days from issuance. As part of the negotiations for 
the sale of the servicing operations, the Company and CCFC are negotiating 
the extension of the term of the bridge loan. If the closing is significantly 
delayed, CCFC, at its sole discretion, may call the note due immediately. As 
collateral for the bridge loan, the Company pledged to CCFC a security 
interest in FIRSTPLUS Bank.

     On October 20, 1998, the U.K. loan and servicing operations were sold 
for approximately $13.0 million and the proceeds were used for general 
corporate purposes and funding of new loan originations. In addition, the 
Company is attempting to sell its consumer finance company and conforming 
first lien loan branches. Management hopes to complete these sales by the 
end of the year or early part of 1999 and use the proceeds from these future 
dispositions for general corporate purposes, funding of new loan originations
or paying down existing debt obligations.

     On April 23, 1998, the Company closed its first net interest margin 
transaction ("NIMS"). The Company secured $150 million of bonds with I/O 
Strips from its 1996-4, 1997-1, 1997-2, 1997-3 and 1997-4 High LTV Loan 
securitizations, a limited portion of servicing fees from those 
securitizations to be earned, and a $30 million demand note. The bonds carry 
a coupon of 8.5% and were sold at 99.55% of par for a bond equivalent yield 
of approximately 8.87%. The funds received from the bonds were used to pay 
down the term lines facilities related to each securitization. The debt 
service of these bonds is paid from the excess residual income of the I/O 
Strips and receivable from trust and the previously mentioned servicing fees. 
If the excess residual income and servicing fees are not sufficient to meet 
scheduled debt service requirements, the bondholders have the right to call 
the $30.0 million demand note, with the remaining portion of the debt being 
unsecured. As the bonds are secured by the excess residual income of I/O 
Strips, the bonds have significant prepayment risk. If prepayment and default 
rates are faster than anticipated, the excess residual income may not be 
sufficient to cover debt service of the bonds. As of September 30, 1998, the 
outstanding balance of the bonds was $139.5 million. The bonds are currently 
ahead of the minimum debt service requirements.

      Historically, the Company has operated on a negative operating cash 
flow basis. The Company's operations used $306.3 million during the nine 
months ended September 30, 1998, compared to $930.0 million during the nine 
months ended September 30, 1997. The cash used in operations is primarily 
related to loan originations, the cost of an enlarged infrastructure and 
employee base, advertising and other marketing costs associated with the 
increased direct to consumer loan originations and the costs that accompany 
the Company's securitization strategy. The Company's investing activities 
used cash of $53.9 million during the nine months ended September 30, 1998, 
compared to provided cash of $14.5 million in the nine months ended September 
30, 1997. Financing activities provided cash of $374.5 million for the nine 
months ended September 30, 1998, compared to $990.4 million in the nine 
months ended September 30, 1997. The cash provided by financing activities 
was primarily due to borrowings related to the warehouse, repurchase, time 
deposits and term line facilities, net of repayments, which have been used to 
fund loan originations, working capital and securitization costs. Following 
the curtailment of the Company's correspondent division, the amount of loan 
premiums paid will be substantially less than historic levels. Therefore, the 
Company should experience an improvement in operating cash flows.

      In addition, the Company has a strategy of maintaining a significant 
quantity of loans on its balance sheet, thus increasing the length of time 
that loans are held for sale and materially increasing its interest rate 
risk. Because the Company's present loan facilities bear interest at variable 
rates, the Company has a need for medium- to long-term fixed-rate financing. 
If the Company is unable to obtain such financing, it could have a material 
adverse effect on the Company's results of operations and financial condition.

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RECENT ACCOUNTING PRONOUNCEMENTS

      On October 23, 1998, the FASB issued a draft guide, in question and 
answer format, entitled: "A Guide to Implementation of Statement 125 on 
Accounting for Transfers and Servicing of Financial Assets and 
Extinguishments of Liabilities, Questions and Answers, Second Edition" (the 
"draft Q&A"). The draft Q&A indicates that two methods have arisen in 
practice for accounting for credit enhancements, items which the Company 
records as I/O Strips and receivable from trust. These methods are the 
cash-in method and the cash-out method. The cash-in method treats credit 
enhancements (pledged loans or cash) as belonging to the Company. As such, 
the receivable from trust is recorded at face value. The cash-out method 
treats credit enhancements as assets owned by the related securitization 
trusts. As such, the receivable from trust cash flows are treated as part of 
the I/O Strip and the combined I/O Strips and the receivable from trust cash 
flows are recorded at a discounted value for the period between when the cash 
is collected by the trust and released to the Company. The draft Q&A 
indicates that the cash-out method should be used to measure the fair value 
of credit enhancements, including subordinated I/O Strips. The draft Q&A 
remains subject to a comment period and further amendments prior to becoming 
effective and applicable to the Company in its final form.

      The Company has historically used the cash-in method to account for its 
I/O Strips and receivable from trust. Management has not determined the
ultimate impact the adoption of this draft Q&A will have, but believes it will 
be material to the Company. 

YEAR 2000 READINESS DISCLOSURE STATEMENT

      The "Year 2000" issue refers to the phenomenon whereby computer 
programs, having been written using two digits rather than four to define the 
applicable year, may erroneously recognize a date using "00" as the year 1900 
rather than the year 2000. This error could potentially result in systems 
failures or miscalculations that cause disruptions of business operations, 
including, among other things, a temporary inability to process transactions 
or engage in similar normal business activities.

      In preparation for the year 2000, the Company has implemented a Year 2000 
Program to inventory, assess and renovate its critical systems for loan 
origination and servicing, telemarketing, consumer credit, securitization, 
payroll, human resources and facilities operations. The major phases of the 
Year 2000 Program are the Inventory, Assessment, Remediation and Testing, and 
Business Contingency Planning phases. The Company's goal is to achieve Year 
2000 mitigation of its mission-critical systems by December 31, 1998.

      During the Inventory phase, an outside consultant gathered and 
organized applications, networks, distribution computing and infrastructure 
profiles and data in order to determine the size, scope and complexity of the 
Company's exposure to Year 2000 problems. The Inventory phase was completed 
during the quarter ending September 30, 1998. The results of the Inventory 
phase are being used to develop an approach to mitigating the Company's Year 
2000 problems.

      In the Assessment phase, the Company hired an outside consultant to 
perform a Year 2000 compliance assessment of the Company's hardware, software 
and firmware at various locations and to deliver a comprehensive report of 
areas of exposure and recommended solutions for compliance for the Company's 
business critical applications. This phase is expected to be completed during 
the quarter ended December 31, 1998.

      During the Remediation and Testing phase, the Company will upgrade 
several servers and take other actions that were identified as necessary 
during the Inventory and Assessment phases. The Company then will test 
business-critical systems for ability to process dates. This phase was 
approximately 10% complete through the end of the quarter ending September 30,
1998, and, assuming that the sale of the Company's servicing operations takes
place, this phase is expected to be completed during the quarter ending 
September 30, 1998. In the event that the sale of the servicing operations 
does not occur, significant remediation or replacement of the software 
currently used in the servicing operations will be required. Such remediation 
or replacement of the servicing software likely would not be completed until 
sometime in 1999.

      In the Business Contingency Planning phase, the Company will develop 
contingency plans to address unexpected issues or failures that may arise as 
a result of Year 2000 related failures. The business contingency plan will 
take an approach that complements the Company's existing Disaster Recovery 
Planning Process. The Company expects its contingency plans to be completed 
in the first quarter of 1999.

         The Company has initiated formal communications with outside vendors 
in order to assess the extent to which the Company's upgraded systems are 
vulnerable to those third parties' failure to remedy their own Year 2000 
issues. The 

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<PAGE>

Company has received compliance statements from key vendors and will verify 
these compliance claims as appropriate. The assessment is ongoing and is 
expected to be completed in conjunction with the completion of the business 
contingency plan. The failure of key vendors to remedy their own Year 2000 
issues could have a material impact on the operations of the Company.

      The Company presently believes that, with modifications to existing 
software and conversions to new software, the Year 2000 issue will not pose 
significant operational problems for its systems. However, if such 
modifications and conversions are not made, or are not completed timely, the 
Year 2000 issue could have a material impact on the operations of the Company.

      The Company presently estimates its cost for its Year 2000 Program at 
$6.2 million. Of this amount, approximately $1.55 million, or 25%, was 
spent as of September 30, 1998. If the sale of the Company's servicing 
operations is completed, the estimated costs for the Year 2000 Program should 
decrease.

FORWARD LOOKING STATEMENTS

      The above statements contained in this Form 10-Q that are not historical
facts, including, but not limited to, statements that can be identified by 
the use of forward-looking terminology such as "may," "will," "expect," 
"anticipate," "estimate" or "continue" or the negative thereof or other 
variations thereon or comparable terminology, are forward-looking statements 
within the meaning of the Private Securities Litigation Reform Act of 1995, 
and involve a number of risks and uncertainties. The actual results of the 
future events described in such forward-looking statements in this press 
release could differ materially from those stated in such forward-looking 
statements. Among the factors that could cause actual results to differ 
materially are: short-term interest rate fluctuations, level of defaults and 
prepayments, general economic conditions, competition, government regulation 
and possible future litigation, as well as the risks and uncertainties 
discussed in the Company's Current Report on Form 8-K, dated December 19, 
1996, including without limitation, the uncertainties set forth from time to 
time in the Company's other public reports and filings and public statements.

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PART II.   OTHER INFORMATION

Item 1.    LEGAL PROCEEDINGS

           On July 22, 1998, a class action lawsuit entitled MACK ET AL. V. 
FIRSTPLUS FINANCIAL, INC. ET. AL. was filed against FIRSTPLUS FINANCIAL, INC. 
by employees of FIRSTPLUS FINANCIAL, INC., alleging breach of contract, 
improper wage deductions, violations of the Fair Labor Standards Act and 
invasion of privacy. In August 1998, the case was dismissed without prejudice 
by the United States District Court for the Central District of California, 
which referred the employee claims to arbitration for resolution. Plaintiffs 
have petitioned the Orange County, California Superior Court for class-wide 
and/or consolidated arbitration proceedings, which FIRSTPLUS FINANCIAL, INC. 
is vigorously opposing.

           On August 4, 1998, a consumer class action suit entitled KAHLER v. 
FIRSTPLUS FINANCIAL, INC., et al, was filed against FIRSTPLUS FINANCIAL, 
INC., alleging violations of federal statutes including Real Estate 
Settlement Act, Truth in Lending Act, and Uniform Unfair Trade Practices Act 
in connection with upcharging appraisals and credit reports. The case has 
been removed to the United States District Court for the Central District of 
California and has not received class action certification. The Company is 
vigorously defending such lawsuit.

           On October 12, 1998, LIFE Financial Corp. terminated the agreement 
and plan of merger between itself and the Company. On October 19, 1998, LIFE 
Financial Corp. filed a complaint in the United States District Court, 
Northern Districts of Texas, Dallas Division against the Company alleging 
breach of the agreement and plan of merger and seeking unspecified monetary 
damages. The Company believes the suit is without merit and intends to 
vigorously defend the suit.

           On October 30, 1998, a complaint was filed in the United States 
District Court, Northern District of Texas, Dallas Division, on behalf of 
Evan Linnett and Lynne H. Sinay, stockholders of the Company, and all others 
similarily situated, against the Company, and against Mr. Phillips, Mr. Green 
and Mr. Benac, individually.  On October 30, 1998, a complaint was filed in 
the United States District Court, Northern District of Texas, Dallas 
Division, on behalf of Robert A. Staub, a stockholder of the Company, and all 
others similarily situated, against the Company, and against Mr. Phillips, 
Mr. Green and Mr. Benac, individually.  On November 6, 1998, a complaint was 
filed in the United States District Court, Northern District of Texas, Dallas 
Division, on behalf of Robert Aldoroti, Gilbert M. Carson and G.M. Carson, 
Inc., stockholders of the Company, and all others similarily situated, 
against the Company, and against Mr. Phillips, Mr. Green and Mr. Benac, 
individually.  On November 6, 1998, a complaint was filed in the United 
States District Court, Northern District of Texas, Dallas Division, on behalf 
of Robert DiPippo and Robert Ziatz, stockholders of the Company, and all 
others similarily situated, against the Company, and against Mr. Phillips, 
Mr. Green and Mr. Benac, individually.  On November 6, 1998, a complaint was 
filed in the United States District Court, Northern District of Texas, Dallas 
Division, on behalf of Marilyn Mandel, a stockholder of the Company, and all 
others similarily situated, against the Company, and against Mr. Phillips, 
Mr. Green and Mr. Benac, individually. On November 12, 1998, a complaint was 
filed in the United States District Court, Northern District of Texas, Dallas 
Division, on behalf of Twin Plus LLC and Trust Advisors Equity PLS LLC, 
stockholders of the Company, and all other similarily situated individuals, 
against the Company, and against Mr. Phillips, Mr. Green and Mr. Benac, 
individually.  Each of these suits alleges that the Company and the 
individual defendants made misleading and false public statements in various 
press releases and public filings in violation of the federal securities 
laws.  The plaintiffs in each of these class action lawsuits are seeking 
unspecified monetary damages.  The Company intends to vigorously defend these 
lawsuits.

           The Company is also aware that other, similar lawsuits have been 
or are in the process of being filed against the Company and certain of its 
officers and directors.  The Company intends to vigorously defend any such 
lawsuits.

Item 2.    CHANGES IN SECURITIES

                 Not Applicable

Item 3.    DEFAULTS UPON SENIOR SECURITIES

                 Not Applicable

Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                 Not Applicable

Item 5.    OTHER INFORMATION

                 Not Applicable

Item 6.    EXHIBITS AND REPORTS ON FORM 8-K

              (A) Exhibits:

                    27- Financial Data Schedule

              (B) Reports on Form 8-K



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

FIRSTPLUS Financial Group, Inc.
(Registrant)

by: /s/  William P. Benac
    ---------------------------------------------------------
    William P. Benac
    Chief Financial Officer
    (Principal Financial Officer and Duly Authorized Officer)

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<PAGE>

date:  November 17, 1998

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