SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20429

                                    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       March 31, 1998
                               ---------------------------

OR

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

For the transition period from                   to
                              ------------------    -------------------
                              File Number 333-16867

                           Outsourcing Solutions Inc.
             (Exact name of registrant as specified in its charter)

           Delaware                                    58-2197161
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation of organization)

390 South Woods Mill Road, Suite 350
       Chesterfield, Missouri                             63017
(Address of principal executive office)                 (Zip Code)

Registrant's telephone number, including area code:  (314) 576-0022

Check here whether the issuer (1) has filed all reports  required to be filed by
Sections 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 [ ]

As of March 31, 1998, the following shares of the Registrant's common stock were
issued and outstanding:

   Voting common stock                             3,477,126.01
   Class A convertible nonvoting common stock        391,740.58
   Class B convertible nonvoting common stock        400,000.00
   Class C convertible nonvoting common stock      1,040,000.00
                                                   ------------
                                                   5,308,866.59

Transitional Small Disclosure       (check one): Yes [ ]      No [X]

<PAGE>
                           OUTSOURCING SOLUTIONS INC.
                                AND SUBSIDIARIES

                                      INDEX

Part I.   Financial Information

          Item 1.  Financial Statements

                   Condensed Consolidated Balance Sheets March 31, 1998
                   (unaudited)and December 31, 1997............................3

                   Condensed Consolidated Statements of Operations for
                   the three months ended March 31, 1998 and
                   1997 (unaudited)............................................4

                   Condensed Consolidated Statements of Cash Flows for 
                   the three months ended March 31, 1998 and 1997
                   (unaudited).................................................5

                   Notes to Condensed Consolidated Financial Statements
                   (unaudited).................................................6

          Item 2.  Management's Discussion and Analysis of
                   Financial Condition and Results of Operations...............9

Part II.  Other Information...................................................10

<PAGE>

OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share amounts)
--------------------------------------------------------------------------------
                                                    March 31,       December 31,
                                                      1998            1997
                                                    Unaudited         Audited
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                        $ 14,936          $  3,217
  Cash and cash equivalents held for clients         26,735            20,762
  Current portion of purchased loans and
    accounts receivable portfolios                   43,611            42,915
  Accounts receivable - trade, less allowance
    for doubtful receivables of $1,231 and 538       41,560            27,192
  Other current assets                                5,827             2,119
                                                   --------          --------
         Total current assets                       132,669            96,205

PURCHASED LOANS AND ACCOUNTS RECEIVABLE
 PORTFOLIOS                                           25,375            19,537

PROPERTY AND EQUIPMENT, net                          44,397            32,563

INTANGIBLE ASSETS, net                              430,649           219,795

DEFERRED FINANCING COSTS, net                        14,788            12,517

OTHER ASSETS                                          8,375             1,073
                                                   --------          ---------

TOTAL                                              $656,253          $381,690
                                                   ========          ========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
  Accounts payable - trade                         $  5,439          $  6,977
  Collections due to clients                         26,735            20,762
  Accrued compensation                               16,008             8,332
  Other current liabilities                          56,436            26,131
  Current portion of long-term debt                  16,765            15,445
                                                   --------          --------
         Total current liabilities                  121,383            77,647

LONG-TERM DEBT                                      516,624           309,521

OTHER LONG-TERM LIABILITIES                          26,327              -

STOCKHOLDERS' EQUITY (DEFICIT):
  8%nonvoting cumulative redeemable exchange-
    able preferred stock; authorized 1,000,000
    shares, 973,322.32 and 935,886.85 shares,
    respectively, issued and outstanding, at
    liquidation value of $12.50 per share            12,167            11,699
  Voting common stock; $.01 par value;
    authorized 7,500,000 shares and 3,477,126.01
    and 3,477,126.01 shares, respectively,
    issued and outstanding                               35                35
  Class A convertible nonvoting common stock;
    $.01 par value; authorized 7,500,000
    shares, 391,740.58 shares issued and
    outstanding                                           4                 4
  Class B convertible nonvoting common stock;
    $.01 par value; authorized 500,000 shares, 
    400,000 shares issued and outstanding                 4                 4
Class C convertible nonvoting common stock;
    $.01 par value; authorized 1,500,000 shares,
    1,040,000 shares issued and outstanding              10                10
Paid-in capital                                      66,958            66,958
Retained deficit                                    (87,259)          (84,188)
                                                    --------          --------
         Total stockholders' equity (deficit)        (8,081)           (5,478)
                                                    --------          --------

TOTAL                                               $656,253         $381,690
                                                    ========         =========

     See notes to the unaudited condensed consolidated financial statements.

<PAGE>

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands)
--------------------------------------------------------------------------------
                                                              Three Months Ended
                                                                   March 31,
                                                              ------------------
                                                                1998      1997

REVENUES                                                      $114,826  $63,842

EXPENSES:
  Salaries and benefits                                         54,552   32,262
  Service fees and other operating and administrative
    expenses                                                    35,653   17,253
  Amortization of loans and accounts receivable purchased        9,040    8,546
  Amortization of goodwill and other intangibles                 3,495    8,011
  Depreciation expense                                           3,127    2,524
                                                               -------- --------

         Total expenses                                        105,867   68,596
                                                               --------  -------

OPERATING INCOME (LOSS)                                          8,959   (4,754)

INTEREST EXPENSE - Net                                          11,224     6,523
                                                               --------  -------

LOSS BEFORE INCOME TAXES AND MINORITY INTEREST                  (2,265) (11,277)

INCOME TAX BENEFIT                                                 -     (3,496)

MINORITY INTEREST                                                  572      -
                                                               --------  -------

NET LOSS                                                        (2,837)  (7,781)

PREFERRED STOCK DIVIDEND REQUIREMENTS                              234      195
                                                               --------  -------

NET LOSS TO COMMON STOCKHOLDERS                                $(3,071) $(7,976)
                                                               ======== ========

     See notes to the unaudited condensed consolidated financial statements.
<PAGE>

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands except share amounts)
--------------------------------------------------------------------------------
                                                              Three Months Ended
                                                                   March 31,
                                                              ------------------
                                                                1998      1997

OPERATING ACTIVITIES:
  Net loss                                                   $ (2,837) $ (7,781)
  Adjustments to reconcile net loss to net cash provided
    by (used in)operating activities:
    Depreciation and amortization                               7,286    11,039
    Amortization of loans and accounts receivable purchased     9,040     8,546
    Deferred taxes                                                -      (3,496)
    Minority interest                                             572       -
    Change in assets and liabilities:
      Other current assets                                       (949)   (1,003)
      Accounts payable and other current liabilities           (4,309)   (1,580)
                                                             --------- ---------
         Net cash provided by operating activities              8,803     5,725
                                                             --------- ---------

INVESTING ACTIVITIES:
  Payments for acquisitions, net of cash acquired            (163,670)      -
  Purchase of loans and accounts receivable portfolios        (15,574)   (9,217)
  Acquisition of property and equipment                        (2,856)   (1,753)
                                                             --------- ---------
         Net cash used in investing activities               (182,100)  (10,970)
                                                             --------- ---------

FINANCING ACTIVITIES:
  Proceeds from term loans                                    225,469       -
  Borrowings under revolving credit agreement                  73,400     5,000
  Repayments under revolving credit agreement                 (87,000)      -
  Repayments of debt                                          (23,918)   (2,409)
  Deferred financing fees                                      (2,935)     (210)
                                                             --------- ---------
         Net cash provided by financing activities            185,016     2,381
                                                             --------- ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS           11,719    (2,864)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                  3,217    14,497
                                                             --------- ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD                     $ 14,936  $ 11,633
                                                             --------- ---------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during period for interest                       $  3,319  $  2,356
                                                             ========= =========

SUPPLEMENTAL  DISCLOSURE OF NONCASH INVESTING AND FINANCING  ACTIVITIES - During
the three months ended March 31, 1998 and 1997, the Company paid preferred stock
dividends  of $468 and $433,  respectively,  through the  issuance of  37,435.47
shares and 34,611.20 shares of preferred stock, respectively.

     See notes to the unaudited condensed consolidated financial statements.
<PAGE>



OUTSOURCING SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands)


NOTE 1.  BASIS OF PRESENTATION

The accompanying unaudited condensed 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 months ended March 31, 1998 are
not  necessarily  indicative  of the results  that may be expected  for the year
ended  December 31,  1998.  For purposes of  comparability,  certain  prior year
amounts have been reclassified to conform with current year presentation.  These
Condensed  Consolidated  Financial Statements should be read in conjunction with
the  Consolidated  Financial  Statements  and  notes  thereto  contained  in the
Company's Form 10-K for the year ended December 31, 1997.


NOTE 2.  ACQUISITION

On January 23, 1998, the Company acquired  through a tender offer  approximately
77% of the outstanding shares of The Union Corporation's  ("Union") common stock
for $31.50 per share.  The merger was completed on March 31, 1998. The aggregate
purchase price of the Union  acquisition was  approximately  $230,000  including
transaction fees, assumed liabilities, and certain adjustments to conform to the
Company's accounting  policies.  The Company financed the acquisition with funds
provided  by the Second  Amended  and  Restated  Credit  Agreement  (as  defined
herein).  Union  furnishes  a broad range of credit and  receivables  management
outsourcing services and management and collection of accounts  receivable.  The
acquisition   was  accounted  for  under  the  purchase  method  of  accounting.
Accordingly,  the purchase price has been preliminarily allocated based upon the
estimated  fair  value  of the  assets  acquired.  This  treatment  resulted  in
approximately  $213,600 of goodwill  that will be amortized  over 30 years using
the  straight-line  method.  Union's operating results have been included in the
Company's  consolidated results since January 23, 1998, recognizing the minority
interest through the completion date of the merger.

The unaudited pro forma consolidated financial data presented below gives effect
to the Union  acquisition and the North Shore Agency and  Accelerated  Bureau of
Collections acquisitions that occurred in the fourth quarter of 1997, as if such
acquisitions  had occurred as of January 1, 1997. The pro forma  adjustments are
based  upon  available  information  and  certain  assumptions  that  management
believes are reasonable.  The unaudited pro forma consolidated financial data do
not purport to represent  what the  Company's  financial  position or results of
operations would have been if consummation of the  acquisitions of Union,  North
Shore  Agency and  Accelerated  Bureau of  Collections  had occurred on the date
indicated or which may be achieved in the future.  Except for the elimination of
costs associated with duplicative  administrative functions and facilities based
upon actions actually taken as of the close of the transaction, anticipated cost
savings have not been  reflected in this  presentation.  The unaudited pro forma
consolidated  financial data should be read in  conjunction  with the historical
consolidated  financial  statements and  accompanying  notes for Company,  Union
(filed separately), North Shore Agency and Accelerated Bureau of Collections.

                                                          For the three months
                                                              Ended March 31,
                                                        ------------------------
                                                          1998          1997
                                                          ----          ----
Revenues                                                $122,180       $114,101
                                                        =========      =========
Net loss                                                $ (3,958)      $ (8,682)
                                                        =========      =========

NOTE 3.  DEBT

On January 26,  1998,  the Company  entered  into a Second  Amended and Restated
Credit  Agreement  ("Agreement").  This  Agreement  amended the existing  credit
agreement.  The Agreement  consists of $412,422 term loan facility and a $58,000
revolving credit facility.

The term loan  facility  consists  of a term loan of $62,500  ("Term Loan A"), a
term loan of $124,922  ("Term  Loan B") and a term loan of $225,000  ("Term Loan
C"), which mature on October 15, 2001, 2003 and 2004, respectively.  The Company
is required to make quarterly principal  repayments on each term loan. Term Loan
A bears  interest,  at the  Company's  option,  (a) at a base rate  equal to the
greater of the federal funds rate plus 0.5% or the lender's customary base rate,
plus 1.5% or (b) at the reserve adjusted Eurodollar rate plus 2.5%. Term Loans B
and C bear interest,  at the Company's  option,  (a) at a base rate equal to the
greater of the federal funds rate plus 0.5% or the lender's customary base rate,
plus 2.0% or (b) at the reserve adjusted Eurodollar rate plus 3.0%.

The  revolving  facility has a term of five years and is fully  revolving  until
October 15, 2001. The revolving credit facility bears interest, at the Company's
option,  (a) at a base rate equal to the greater of the federal  funds rate plus
0.5% or the  lender's  customary  base  rate,  plus  1.5% or (b) at the  reserve
adjusted Eurodollar rate plus 2.5%.

The  Agreement  is  guaranteed  by  all  of  the  Company's   present   domestic
subsidiaries  and  is  secured  by all of the  stock  of the  Company's  present
domestic  subsidiaries  and  by  substantially  all of  the  Company's  domestic
property assets.  The Agreement  contains certain covenants the more significant
of which limit dividends, asset sales, acquisitions and additional indebtedness,
as well as  requiring  the  Company to  satisfy  certain  financial  performance
ratios.

On March 31, 1998,  as required by the  Agreement,  the Company  entered into an
interest rate swap agreement with a notional  principal value of $32,000 for the
purpose of managing  interest rate risk on a portion of floating-rate  long-term
debt. The swap agreement fixes the interest rate on certain  variable-rate  debt
at a rate of 9.105%.  The  contract has a maturity  date of March 31, 2001.  The
Company's  credit  exposure on the swap is limited to the value of the swap,  if
such swap is in a favorable position to the Company.


NOTE 4.  LITIGATION

The Company is subject to various  investigations,  claims and legal proceedings
covering a wide range of matters that arise in the normal course of business and
are routine to the nature of the Company's business. In addition, as a result of
the  Union  acquisition,  the  Company  is  a  party  to  several  environmental
remediation  investigations  and clean-ups and, along with other companies,  has
been named a "potentially  responsible  party" for certain waste disposal sites.
Each of these  matters is subject to various  uncertainties,  and it is possible
that some of these matters will be decided unfavorably against the Company.  The
Company  has  established,  with input  from  environmental  and legal  experts,
accruals for matters that are in its view  probable  and  reasonably  estimable.
Based on information  presently available and expert input provided,  management
believes   that   existing   accruals  are   sufficient  to  satisfy  any  known
environmental liabilities.


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

Results of Operations

Revenues for the three months ended March 31, 1998 were $114.8 million  compared
with $63.8  million in the same period  last year - an  increase  of 79.9%.  The
revenue  increase  of  $51.0  million  was due to  increased  fee  services  and
portfolio  collection  revenues of $3.9  million - an increase of 6.1% over last
year, and $47.1 million from the  acquisitions of Union,  North Shore Agency and
Accelerated Bureau of Collections. Revenues from fee services were $87.8 million
for the three  months  ended  March 31, 1998  compared  to $44.1  million in the
comparable  period  in 1997.  The  increase  in fee  revenues  was due to a 3.5%
increase in existing  business and $42.2  million  from the three  acquisitions.
Revenues from  purchased  portfolios  increased to $18.5 million for the quarter
ended March 31, 1998 compared to $15.7 million in 1997 - up 17.8%. The increased
revenue resulted from additional  portfolio purchases and higher strategic sales
of portfolios.  The outsourcing  revenue of $8.5 million  compared  favorably to
prior year of $4.0 million due to the Union acquisition.

Operating expenses for the three months ended March 31, 1998 were $105.9 million
compared  to $68.6  million for the  comparable  period in 1997 - an increase of
$37.3 million.  Operating  expenses,  exclusive of amortization and depreciation
charges,  were $90.2 million for the three months ended March 31, 1998 and $49.5
million for the comparable  period in 1997. The increase in operating  expenses,
exclusive of amortization and depreciation charges,  resulted primarily from the
three  acquisitions  as well as higher  collection-related  expenses  due to the
increased  revenue.  Of the $105.9  million in operating  expenses for the three
months ended March 31, 1998,  $15.7 million was attributable to amortization and
depreciation  charges  compared to $19.1  million for the same period last year.
The lower amortization and depreciation charges were due to no account inventory
amortization in 1998 since account inventory was fully amortized at December 31,
1997 offset  partially by increased  depreciation  and  amortization of goodwill
related to the three acquisitions.

As a result of the above, the Company generated operating income of $9.0 million
for the three months ended March 31, 1998 compared to an operating  loss of $4.8
million for the comparable period in 1997.

Earnings before interest expense, taxes,  depreciation and amortization (EBITDA)
for the quarter ended March 31, 1998 was $24.6 million compared to $14.3 million
in 1997. The increase of $10.3 million  consisted of $9.1 million as a result of
the three  acquisitions  and $1.2  million  from the  increased  revenue of $3.9
million - a 30.8% margin.

Interest  expense,  net for the three  months  ended  March  31,  1998 was $11.2
million compared to $6.5 million for the comparable period in 1997. The increase
was  primarily  due to  additional  indebtedness  incurred to finance the Union,
North Shore Agency and Accelerated Bureau of Collections acquisitions.

Consistent with management's  assessment made in the fourth quarter of 1997, the
potential tax benefits  generated by additional net operating loss carryovers or
the future  reversal of the net deductible  temporary  differences for the three
months ended March 31, 1998 were fully offset by  valuation  allowances  of $0.9
million.  

Minority  interest in earnings in 1998 resulted from the Union  acquisition.  On
January 23, 1998, the Company acquired through a tender offer  approximately 77%
of the outstanding common stock of Union. The purchase of all outstanding common
stock of Union was completed on March 31,1998.  The Company recognized  minority
interest in earnings of Union  during the period from  January 23, 1998 to March
31, 1998.

Due to the factors  stated  above,  the net loss for the quarter ended March 31,
1998 was $2.8 million compared to $7.8 million for the comparable period in 1997
- an improvement of $5.0 million.


Financial Condition, Liquidity and Capital Resources

At March 31, 1998,  the Company had cash and cash  equivalents of $14.9 million.
The Company has a $58.0  million  revolving  credit  facility,  which allows the
Company  to  borrow  for  working  capital,   general  corporate   purposes  and
acquisitions,  subject to certain conditions.  As of March 31, 1998, the Company
had outstanding  $18.3 million under the revolving credit facility leaving $38.7
million,  after  outstanding  letters of credit,  available  under the revolving
credit facility.

Since  December 31, 1997,  cash and cash  equivalents  increased  $11.7  million
primarily due to cash provided by  operations  and financing  activities of $8.8
million and $185.0 million, respectively,  offset by cash utilized for the Union
acquisition  of $163.7  million and  purchases of loans and accounts  receivable
portfolios  of $15.6  million.  The Company also held $26.7  million of cash for
clients in restricted trust accounts at March 31, 1998.

For the first three months in 1998,  the Company made  capital  expenditures  of
$2.9 million  primarily  for the  replacement  and  upgrading  of equipment  and
expansion of the Company's information services systems. The Company anticipates
spending approximately $17.0 million during 1998.

All of  the  statements  in  this  document  other  than  historical  facts  are
forward-looking  statements made in reliance upon the safe harbor of the Private
Securities  Litigation  Reform Act of 1995.  There can be no assurances that the
Company's actual results will be materially consistent with such forward-looking
information.  Factors and  uncertainties  that could  affect the outcome of such
forward-looking   statements   include,   among  others,   market  and  industry
conditions,  increased competition, changes in governmental regulations, general
economic  conditions,  pricing pressures,  and the Company's ability to continue
its growth and expand  successfully  into new markets and services.  The Company
disclaims  any  intention  or  obligation  to  update  publicly  or  revise  any
forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise.


PART II.  OTHER INFORMATION


Item 1.  Legal Proceedings

The Company is subject to various  investigations,  claims and legal proceedings
covering a wide range of matters that arise in the normal course of business and
are routine to the nature of the Company's business. In addition, as a result of
the  Union  acquisition,  the  Company  is  a  party  to  several  environmental
remediation  investigations  and clean-ups and, along with other companies,  has
been named a "potentially  responsible  party" for certain waste disposal sites.
Each of these  matters is subject to various  uncertainties,  and it is possible
that some of these matters will be decided unfavorably against the Company.  The
Company has established accruals for such environmental  matters that are in its
view probable and reasonably estimable.

Based on  information  presently  available,  management  believes that existing
accruals  are  sufficient  to  satisfy  any  known  environmental   liabilities.
Further,   any  additional  liability  that  may  ultimately  result  from  the
resolution  of these  matters is not  expected to have a material  effect on the
Company's business, financial condition or results of operations.  Additionally,
there  have  been no  material  developments  in  proceedings  since  previously
reported in the Company's Form 10-K for the year ended December 31, 1997.


Item 2.  Changes in Securities

None.

Item 3.  Defaults Upon Senior Securities

None.


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

None.


Item 5.  Other Information

None.


Item 6.  Exhibits and Reports on  Form 8-K

         (a)  Exhibits

              Exhibit 27 Financial Data Schedule (Unaudited)

         (b)  Reports on Form 8-K

              During the quarter, the following reports on Form 8-K were filed:

                   Report on Form 8-K filed February 6, 1998.

                   Report on Form 8-K/A filed April 8, 1998.

<PAGE>

                                   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.


                            OUTSOURCING SOLUTIONS INC.
                              (Registrant)


                            /s/ TIMOTHY G. BEFFA
                            -----------------------------------------------
                            Timothy G. Beffa
                            President and Chief Executive Officer


                            /s/ DANIEL J. DOLAN
                            -----------------------------------------------
                            Daniel J. Dolan
                            Executive Vice President and Chief Financial Officer


Date:  May 14, 1998