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         March 31, 2002
                                --------------------------------

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  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
  incorporation or organization)                     Identification Number)

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

Indicate by checkmark whether the registrant: (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
                                         -----     -----

Indicate the number of shares  outstanding  of each of the  issuers  classes of
common stock as of the latest practicable date.

                                                             Outstanding at
        Class                                                March 31, 2002
-----------------------                                      --------------
Senior common stock                                             489,795.93
Voting common stock                                           6,088,479.30
Non-voting common stock                                         480,321.30
                                                              ------------
                                                              7,058,596.53
                                                              ============


<PAGE>

PAGE 2


                           OUTSOURCING SOLUTIONS INC.
                                AND SUBSIDIARIES



                                TABLE OF CONTENTS


Part I.  Financial Information                                             Page

 Item 1.   Financial Statements (unaudited)

           Condensed Consolidated Balance Sheets
           March 31, 2002 and December 31, 2001..........................    3


           Condensed Consolidated Statements of Operations
           for the three months ended March 31, 2002 and 2001............    4


           Condensed Consolidated Statements of Cash Flows
           for the three months ended March 31, 2002 and 2001............    5


           Notes to Condensed Consolidated Financial Statements..........    6


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


 Item 3.   Quantitative and Qualitative Disclosures About
           Market Risk...................................................   16


Part II. Other Information...............................................   17

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PAGE 3

OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share and per share amounts)
--------------------------------------------------------------------------------

ASSETS                                                 March 31,    December 31,
                                                          2002          2001
                                                      ------------  ------------

Cash and cash equivalents                               $21,661        $ 9,535

Cash and cash equivalents held for clients               30,018         25,920

Accounts receivable - trade, less allowance
  for doubtful receivables of  $1,074 and
  $1,080                                                 64,144         60,100

Purchased loans and accounts receivable
  portfolios                                             23,034         17,477

Property and equipment, net                              45,292         46,952

Goodwill, less accumulated amortization
  of $70,824                                            422,064        421,871

Deferred financing costs, less accumulated
  amortization of $10,135 and $8,844                     18,982         18,665

Other assets                                             40,913         39,690
                                                       --------       --------
             TOTAL                                     $666,108       $640,210
                                                       ========       ========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Accounts payable - trade                                $18,313        $16,192

Collections due to clients                               30,018         25,920

Accrued salaries, wages and benefits                     16,548         13,325

Debt                                                    549,509        539,020

Other liabilities                                        77,679         76,346

Commitments and contingencies (Notes 2 and 9)

Mandatorily redeemable preferred stock;
  redemption amount of $145,305 and $140,560            128,886        123,482

Stockholders' deficit:
  Senior common stock; $.01 par value;
    authorized 900,000 shares,
    489,795.93 issued and outstanding                         5              5
  Voting common stock; $.01 par value;
    authorized 20,000,000 shares,
    9,166,728.37 shares issued                               92             92
  Non-voting common stock; $.01 par value;
    authorized 2,000,000 shares,
    480,321.30 issued and outstanding                         5              5
  Paid-in capital                                       223,277        223,277
  Accumulated deficit                                  (234,743)      (231,754)
  Accumulated other comprehensive loss                   (6,635)        (8,883)
  Notes receivable from management
    for shares sold                                      (1,989)        (1,960)
  Voting common stock in treasury, at cost;
    3,078,249.07 shares                                (134,857)      (134,857)
                                                       --------       --------
        Total stockholders' deficit                    (154,845)      (154,075)
                                                       --------       --------
               TOTAL                                   $666,108       $640,210
                                                       ========       ========


     The accompanying notes are an integral part of the unaudited condensed
                       consolidated financial statements.


<PAGE>

PAGE 4

OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands)
--------------------------------------------------------------------------------

                                                           Three Months Ended
                                                                March 31,
                                                          --------------------
                                                            2002        2001

REVENUES                                                  $161,098    $151,586

EXPENSES:
     Salaries and benefits                                  78,123      74,324
     Service fees and other operating
       and administrative expenses                          54,062      47,619
     Amortization of purchased loans and
       accounts receivable portfolios                        8,109       6,979
     Amortization of goodwill and other
       intangibles                                               -       4,052
     Depreciation expense                                    3,892       3,702
     Conversion, realignment and relocation
       expenses                                              2,500           -
                                                          --------     -------
         Total expenses                                    146,686     136,676
                                                          --------     -------

OPERATING INCOME                                            14,412      14,910

INTEREST EXPENSE - Net                                      11,822      16,261
                                                          --------     -------
INCOME (LOSS) BEFORE INCOME TAXES                            2,590      (1,351)

PROVISION FOR INCOME TAXES                                     175         175
                                                          --------     -------
NET INCOME (LOSS)                                            2,415      (1,526)

PREFERRED STOCK DIVIDEND REQUIREMENTS AND
  ACCRETION OF SENIOR PREFERRED STOCK                        5,404       4,782
                                                          --------     -------

NET LOSS TO COMMON STOCKHOLDERS                           $ (2,989)   $ (6,308)
                                                          ========    ========












     The accompanying notes are an integral part of the unaudited condensed
                       consolidated financial statements.


<PAGE>

PAGE 5

OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
--------------------------------------------------------------------------------

                                                            Three Months Ended
                                                                 March 31,
                                                           --------------------
                                                            2002         2001
OPERATING ACTIVITIES AND PORTFOLIO PURCHASING:
  Net income (loss)                                       $  2,415     $ (1,526)
  Adjustments to reconcile net income (loss)
    to net cash from operating activities
    and portfolio purchasing:
   Depreciation and amortization                             4,686        8,863
   Amortization of purchased loans and
     accounts receivable portfolios                          8,109        6,979
   Change in assets and liabilities excluding
     the effects of acquisitions:
    Purchases of loans and accounts receivable
     portfolios                                            (13,666)      (4,218)
    Accounts receivable and other assets                    (5,661)      (9,168)
    Accounts payable, accrued expenses and
     other liabilities                                       9,511        2,350
                                                          --------     --------
        Net cash from operating activities
          and portfolio purchasing                           5,394        3,280
                                                          --------     --------

INVESTING ACTIVITIES:
  Acquisition of property and equipment                     (2,379)      (2,181)
  Payment for acquisitions, net of cash acquired                 -      (16,300)
  Purchases of loans and accounts receivable
    portfolios for resale to FINCO                               -      (16,622)
  Sales of loans and accounts receivable
    portfolios to FINCO                                          -       16,622
  Other                                                         15            -
                                                          --------     --------
        Net cash used by investing activities               (2,364)     (18,481)
                                                          --------     --------

FINANCING ACTIVITIES:
  Borrowings under revolving credit agreement               48,000       88,300
  Repayments under revolving credit agreement              (33,000)     (73,400)
  Repayments of debt                                        (4,421)      (2,567)
  Deferred financing fees                                   (1,483)        (162)
                                                          --------     --------
        Net cash from financing activities                   9,096       12,171
                                                          --------     --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS        12,126       (3,030)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD               9,535       10,273
                                                          --------     --------

CASH AND CASH EQUIVALENTS, END OF PERIOD                  $ 21,661     $  7,243
                                                          ========     ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during period for interest                    $  8,905     $ 11,942
                                                          ========     ========
  Net cash paid during period for taxes                   $    144     $    112
                                                          ========     ========

SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION:
  Accrued dividends on mandatorily redeemable
    preferred stock                                       $  4,745     $  4,143
                                                          ========     ========
  Accretion of mandatorily redeemable
    preferred stock                                       $    659     $    639
                                                          ========     ========






     The accompanying notes are an integral part of the unaudited condensed
                       consolidated financial statements.

<PAGE>

PAGE 6

OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except for share and per share amounts)


NOTE 1.  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States 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 accounting  principles  generally
accepted in the United States for complete financial statements.  In the opinion
of management, all adjustments (consisting of normal recurring items) considered
necessary for a fair presentation have been included.  Operating results for the
three months ended March 31, 2002 are not necessarily  indicative of the results
that may be expected  for the year ending  December 31,  2002.  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, 2001.


NOTE 2.  LITIGATION

From time to time,  the Company and certain of its  subsidiaries  are 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 businesses.  In addition, as a result of the acquisition
in a prior year of The Union  Corporation,  certain  subsidiaries of the Company
are a party to several  on-going  environmental  remediation  investigations  by
federal and state  governmental  agencies and  clean-ups  and,  along with other
companies,  have been named a "potentially  responsible party" for certain waste
disposal  sites.  While the  results  of  litigation  cannot be  predicted  with
certainty,  the Company has provided  for the  estimated  uninsured  amounts and
costs to resolve the pending suits and management,  in  consultation  with legal
counsel,  believes  that  reserves  established  for the ultimate  resolution of
pending matters are adequate at March 31, 2002.


NOTE 3.  PURCHASED LOANS AND ACCOUNTS RECEIVABLE PORTFOLIOS FINANCING

OSI Funding LLC ("FINCO") is a special-purpose  finance company with the Company
having  approximately  29% of the voting rights.  An unrelated third party holds
the  majority  voting  rights of FINCO and has  decision-making  authority  over
FINCO's operations. The Company's investment in FINCO is accounted for under the
equity method.  FINCO entered into a revolving warehouse  financing  arrangement
(the  "Warehouse  Facility")  for up to  $100,000  of funding  capacity  for the
purchase  of loans and  accounts  receivable  portfolios,  principally  bankcard
receivables,  over  its five  year  term  which  expires  in  October  2003.  In
connection with the establishment of the Warehouse Facility,  FINCO entered into
an agreement with a subsidiary of the Company to provide certain  administrative
and  collection  services on a  contingent  fee basis  (i.e.,  fee is based on a
percent of amount  collected).  The Company believes the fee structure agreed to
by FINCO is representative of a fee structure that would exist with an unrelated
party.  The  services  provided  by the  Company  to FINCO are  similar to those
provided to unrelated parties. Revenue from FINCO is generally recognized by the
Company as collections are received. All borrowings by FINCO under the Warehouse
Facility are without recourse to the Company.

The following  summarizes the transactions between the Company and FINCO for the
period ended March 31:

                                                             2002       2001
Sales of purchased loans and accounts receivable
  portfolios by the Company to FINCO                       $     -    $16,622

Servicing fees paid by FINCO to the Company                $ 8,707    $10,999

Sales of purchased loans and accounts receivable  portfolios  ("Receivables") by
the  Company to FINCO,  when such  Receivables  are  financed  by the  Warehouse
Facility,  were in the same amount and occurred  shortly  after such  portfolios
were acquired by the Company from the various  unrelated  sellers.  As such, the
Company's  Statements of Operations do not include  revenues or expenses related
to these  loans and  accounts  receivable  portfolios.  In  conjunction  with an
agreement to provide certain  administrative  and collection  services to FINCO,
the  Company  can  achieve a bonus  fee if  amounts  in  excess of the  original
purchase price of a portfolio are recovered.  Payment of any bonus is subject to
certain  collateral  and  collection  sharing  requirements  as  outlined in the
agreement.  Receivables  from FINCO,  which are  included in other assets in the
accompanying  condensed  consolidated  balance sheet,  were $16,384 at March 31,
2002 and $17,014 at December 31, 2001.

At March 31, 2002 and December 31, 2001,  FINCO had  unamortized  Receivables of
$57,579 and  $75,921,  respectively.  At March 31, 2002 and  December  31, 2001,
FINCO had outstanding borrowings of $56,056 and $66,391, respectively, under its
Warehouse Facility. See Note 10.

FINCO's summarized results from operations for the periods ended March 31 are as
follows:

                                                             2002       2001

Revenues                                                   $28,735    $26,970
Income from operations                                       1,940      1,622
Net income                                                   1,469        460


NOTE 4.  DERIVATIVES AND HEDGING ACTIVITIES

The Company is subject to the risk of  fluctuating  interest rates in the normal
course of business.  The Company's interest rate hedges are primarily classified
as cash flow hedges.  For a cash flow hedge of an anticipated  transaction,  the
ineffective portion of the change in fair value of the derivative is recorded in
earnings as incurred,  whereas the effective  portion is deferred in accumulated
other comprehensive  income (loss) on the balance sheet until the transaction is
realized,  at which time any  deferred  hedging  gains or losses are recorded in
earnings.  During  the  quarters  ended  March 31,  2002 and 2001,  the  Company
recorded,  as part of  interest  expense,  a gain  of $372  and a loss of  $518,
respectively,  due to the impact of the interest rate hedges.  At March 31, 2002
and December 31, 2001, the related liability  (included in other liabilities) is
$9,314 and $11,934,  respectively.  At March 31, 2002 and December 31, 2001, the
amount included in accumulated other  comprehensive  income (loss) is $6,635 and
$8,883, respectively.


NOTE 5.  COMPREHENSIVE INCOME (LOSS)

The components of total comprehensive  income (loss) for the periods ended March
31 are as follows:

                                                             2002         2001

Net income (loss)                                          $ 2,415      $(1,526)
Other comprehensive income item:
  Net income (loss) on cash flow hedging instruments         2,248       (6,538)
                                                           -------      -------
Total comprehensive income (loss)                          $ 4,663      $(8,064)
                                                           =======      =======


NOTE 6.  CONVERSION, REALIGNMENT AND RELOCATION EXPENSES

For the three  months  ended  March 31,  2002,  the Company  incurred  $2,500 of
nonrecurring consolidation,  realignment and relocation expenses. These expenses
include  costs  resulting  from  closure  of  certain  call  centers,  severance
associated with these office closures,  severance as a result of cost reductions
and certain other one-time costs including certain investigative costs resulting
from the inaccurate financial reporting of certain transactions during and prior
to 2001 at one of the  Company's  subsidiaries,  North Shore  Agency,  Inc.  See
further  discussion  in the  Company's  Annual  Report on Form 10-K for the year
ended  December 31, 2001.  Accrued  costs at March 31, 2002 were $1,901,  all of
which should be substantially settled during 2002.


NOTE 7.  GOODWILL

On January 1, 2002,  the  Company  adopted  Statement  of  Financial  Accounting
Standards ("SFAS") No. 142, Goodwill and Other Intangible  Assets.  SFAS No. 142
eliminates the amortization of goodwill and instead requires  goodwill be tested
for impairment at least annually. Intangible assets deemed to have an indefinite
life under SFAS No. 142 are no longer  amortized,  but instead reviewed at least
annually for impairment.  Intangible assets with finite lives are amortized over
the useful life.

As required by SFAS No. 142, the results  prior to 2002 were not restated in the
condensed  consolidated  statements of operations.  A reconciliation between net
income  (loss)  reported by the Company and the net income (loss) as adjusted to
reflect the impact of SFAS No. 142 for the periods ended March 31 is as follows:

                                                            2002         2001

Net income (loss), as reported                            $ 2,415      $(1,526)
Goodwill amortization                                           -        4,052
                                                          -------      -------
Adjusted net income                                       $ 2,415      $ 2,526
                                                          =======      =======


NOTE 8.  SEGMENT INFORMATION

The Company  has three  reportable  segments,  Outsourcing  Services,  Portfolio
Services  and Recovery  Services.  The  Outsourcing  Services  segment  provides
services  such as  contract  management  of  accounts  receivable,  billing  and
teleservicing  services,  letter  series  programs  and  banking  and  financial
services transaction processing. Portfolio Services involve acquiring portfolios
of  charged-off  consumer  receivables  from credit  grantors  or other  owners,
servicing  such  portfolios  and retaining  all amounts  collected and servicing
customer  owned  portfolios  for an agreed  upon  servicing  fee.  The  Recovery
Services  segment  collects  delinquent or charged-off  consumer  accounts for a
fixed percentage of realized collections or a fixed fee per account. The Company
derives substantially all of its revenues from domestic customers.

The chief operating  decision maker evaluates  performance of the segments based
on  Adjusted   Operating   Earnings   (Operating  income  before   depreciation,
amortization,  corporate  and shared  expenses and  conversion, realignment  and
relocation  expenses,  but after  amortization  of purchased  loans and accounts
receivable  portfolios).  Adjusted  Operating  Earnings  includes only the costs
directly attributable to the operations of the individual segment.  Eliminations
represent  intercompany  revenue.  Assets are not  identified by the  individual
segments and, therefore, are not reported by segment.

The following  table presents  certain data by business  segment for the periods
ended March 31:

         Revenues                                     2002            2001

         Outsourcing services                       $ 90,365       $ 80,503
         Portfolio purchasing services                25,432         23,402
         Recovery services                            51,376         52,902
         Eliminations                                 (6,075)        (5,221)
                                                    --------       --------
         Total revenues                             $161,098       $151,586
                                                    ========       ========


         Adjusted Operating Earnings

         Outsourcing services                       $ 12,844       $ 13,419
         Portfolio purchasing services                 2,219          3,877
         Recovery services                            13,820         13,185
                                                    --------       --------
         Total adjusted operating earnings          $ 28,883       $ 30,481
                                                    ========       ========


NOTE 9.  COMMITMENTS AND CONTINGENCIES

From time to time, the Company enters into servicing  agreements  with companies
which service loans for others.  The servicers handle the collection  efforts on
certain  nonperforming  loans and accounts  receivable on the Company's  behalf.
Payments to the  servicers  vary  depending on the servicing  contract.  Current
contracts expire on the anniversary date of such contracts but are automatically
renewable at the option of the Company.

A subsidiary  of the Company has several  portfolio  flow  purchase  agreements,
whereby the subsidiary has a monthly commitment to purchase  nonperforming loans
meeting certain criteria for an agreed upon price subject to due diligence.  The
duration of these  agreements do not extend beyond one year. The purchases under
the portfolio  flow purchase  agreements  were $8,105 and $882,  which  excludes
amounts  purchased and subsequently sold to FINCO (see Note 3), for the quarters
ended March 31, 2002 and 2001, respectively.


NOTE 10. SUBSEQUENT EVENT

During the finalization of the Company's consolidated financial statements as of
and for the year ended  December 31,  2001,  the Company  identified  inaccurate
financial   reporting  of  certain   transactions   at  one  of  the   Company's
subsidiaries,   North  Shore  Agency,  Inc.  ("NSA").  The  Board  of  Directors
authorized the Audit and Compliance  Committee (the  "Committee")  to conduct an
independent  investigation,  with the assistance of special counsel  retained by
the  Committee,  to  identify  the  causes  of these  discrepancies  and to make
recommendations  to  ensure  similar  issues  do not  recur in the  future.  The
Committee retained Bryan Cave LLP as special counsel, and Bryan Cave LLP engaged
an independent  accounting firm to assist in the  investigation.  As a result of
the  investigation,  it was  determined  that  certain  assets  were  overstated
(primarily  accounts  receivable and prepaid postage) and trade accounts payable
was  understated  at NSA due to the  inaccurate  financial  reporting of certain
transactions.    Consequently,   the   Company   breached   certain   covenants,
representations  and  warranties  of  its  bank  credit  facility  (the  "Credit
Facility") and Warehouse Facility.

The  Company  and the  lenders  to the  Credit  Facility  amended  the  facility
effective  April  10,  2002.  The  amendment  to the  Credit  Facility  included
provisions  that amended the financial  covenants,  waived  certain  defaults of
covenants and breaches in representations and warranties, increased the interest
rate on borrowings  pursuant to the facility (as discussed  below),  and, during
2002,  reduced the Company's  availability  under its Credit Facility by $5,000,
and limited capital  expenditures,  investments and acquisitions.  In connection
with the amendment,  the Company also issued 4,150 shares of its Series B Junior
Preferred Stock with attached warrants to acquire 42,347 shares of the Company's
Senior Common Stock to Madison  Dearborn  Capital Partners III, L.P. and Madison
Dearborn  Special  Equity III, L.P. for a total  purchase  price of $4,150.  The
proceeds of this sale were used to repay the Revolving Facility in the amount of
$2,075 and the balance  pro-rata  to the Term A and B loans,  as provided in the
Credit Facility.  From April 10, 2002 until such time as the Company delivers to
the lenders a compliance  certificate  for the period  ended  December 31, 2002,
borrowings  under the Revolving  Facility and Term A Loan of the Credit Facility
will bear interest,  at the Company's option at (a) the lender's prime rate plus
2.75% or at (b) the Eurodollar rate plus 3.75%. Borrowings under the Term B Loan
will bear interest, at the Company's option, at (a) the lender's prime rate plus
3.50% or (b) the Eurodollar rate plus 4.50%.  The amortization and maturity were
not amended.  Following this  amendment,  the Company is in compliance  with the
Credit Facility and,  subject to the Warehouse  Facility issues discussed below,
expects to be in compliance throughout 2002.

The Company has received a waiver from the lender under the  Warehouse  Facility
for certain breaches of covenants,  representations  and warranties with respect
to periods  through the quarter ended March 31, 2002.  Since the Company,  on an
ongoing  basis,  will continue to be in breach of certain  financial  covenants,
representations  and warranties,  it has initiated  discussions  with the lender
under the  Warehouse  Facility for the purpose of seeking to amend such facility
to cure such breaches,  although there can be no assurance that the Company will
be successful in negotiating  such an amendment.  If the Company is unsuccessful
in  negotiating  such an amendment,  notwithstanding  the waiver  received,  the
Company may again breach certain  covenants,  representations  and warranties in
the  Warehouse  Facility  and there can be no  assurances  that the lender  will
extend the waiver to cover such  breaches.  On an ongoing  basis the Company has
also been  engaged  in  discussions  with  certain  other  providers  of similar
warehouse  facilities.  While there can be no assurances,  the Company  believes
that other  warehouse  facilities  would be available  on economic  terms and in
amounts  comparable to the Company's  existing  Warehouse  Facility  which would
allow the Company to continue its business of  purchasing  of loans and accounts
receivable.  In the event the Company is unable to amend the  current  Warehouse
Facility and it is  terminated  and the Company is unable to enter a replacement
warehouse facility, the Company would be in default of its Credit Facility.

<PAGE>

PAGE 11

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

For discussion of the Company's critical accounting policies,  see the Company's
Annual Report on Form 10-K for the year ended December 31, 2001.

Results of Operations
---------------------

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001
-------------------------------------------------------------------------------

Consolidated  revenues  for the three  months  ended  March 31, 2002 were $161.1
million,  an increase of $9.5 million or 6.3% from $151.6  million for the three
months  ended  March 31,  2001.  Revenues  by segment  are as follows and do not
include the elimination of intercompany revenue (in millions):

                                                 Three Months Ended
                                         ----------------------------------
                                         March 31, 2002      March 31, 2001
                                         --------------      --------------

Outsourcing services                         $ 90.4              $ 80.5
Portfolio purchasing services                  25.4                23.4
Recovery services                              51.4                52.9
Eliminations                                   (6.1)               (5.2)
                                             ------              ------
                                             $161.1              $151.6
                                             ======              ======

Outsourcing services' revenues of $90.4 million for the three months ended March
31,  2002  increased  12.3% from  $80.5  million  in 2001.  The higher  revenues
resulted  primarily  from new business,  increased  collection  letter  products
business and the effects of the acquisition of Coast to Coast Consulting ("CCC")
which was acquired mid-March 2001 offset partially by lower back office services
revenue.

Revenues from the Company's  portfolio  purchasing segment were up $2.0 million,
or 8.5%,  to $25.4  million for the three months ended March 31, 2002 from $23.4
million in 2001.  The  increased  revenue was primarily  attributable  to higher
strategic sales of purchased portfolios.

Recovery  services'  revenues decreased by 2.8% for the three months ended March
31, 2002 on revenue of $51.4 million compared to $52.9 million in 2001 primarily
as a result of lower student loan revenue.

Consolidated  operating  expenses,  inclusive of salaries and benefits,  service
fees and other operating and  administrative  expenses,  were $132.2 million for
the three months  ended March 31, 2002  compared to $122.0  million in 2001,  an
increase of 8.4%. The increase in these operating  expenses  resulted  primarily
from  the  increased  collection-related  expenses  due to the  new  outsourcing
services revenues,  the acquisition of CCC and higher postage expenses.  For the
three months  ended March 31, 2002,  amortization  and  depreciation  charges of
$12.0  million were lower than the $14.7  million for the  comparable  period in
2001. The lower amortization and depreciation  charges were due primarily to the
cessation of goodwill  amortization of $4.1 million in 2001, offset partially by
higher amortization of purchased loans and accounts receivable portfolios due to
higher strategic sales of purchased portfolios.

Outsourcing  services'  operating  income  before  depreciation,   amortization,
corporate  and  shared  expenses  and  conversion,  realignment  and  relocation
expenses  but after  amortization  of purchased  loans and  accounts  receivable
portfolios  ("Adjusted  Operating  Earnings")  was $12.8  million  for the three
months ended March 31, 2002 compared to $13.4 million in 2001. The 4.5% decrease
primarily  resulted from lower back office  services  revenue and higher postage
expense offset partially by the new business revenue.

Adjusted Operating Earnings for portfolio  purchasing  services was $2.2 million
for the three months ended March 31, 2002 compared to $3.9 million in 2001.  The
decrease  of  $1.7  million  was   primarily   attributable   to  the  increased
amortization of purchased loans and accounts  receivable  portfolios as a result
of the higher strategic sales of purchased portfolios.

Recovery  services'  Adjusted  Operating Earnings of $13.8 million for the three
months ended March 31, 2002 compared  favorably to prior year of $13.2  million.
The favorable  variance was primarily due to improved  margins in the government
and  healthcare  industry  groups  offset  partially  by the lower  student loan
revenue.

For the three months ended March 31, 2002, the Company  incurred $2.5 million of
nonrecurring consolidation,  realignment and relocation expenses. These expenses
include  costs  resulting  from  closure  of  certain  call  centers,  severance
associated with these office closures,  severance as a result of cost reductions
and certain other one-time costs including certain investigative costs resulting
from the inaccurate financial reporting of certain transactions during and prior
to 2001 at one of the  Company's  subsidiaries,  North Shore  Agency,  Inc.  See
further  discussion  in the  Company's  Annual  Report on Form 10-K for the year
ended December 31, 2001.

The  Company's  earnings  before  interest  expense,  taxes,   depreciation  and
amortization  ("EBITDA")  for the three  months  ended  March 31, 2002 was $26.4
million  compared to $29.6 million for the same period in 2001. The decrease was
primarily  attributable to the lower outsourcing  services'  Adjusted  Operating
Earnings  and  the  nonrecurring  charges  of  $2.5  million.  Adding  back  the
nonrecurring charges of $2.5 million, EBITDA was $28.9 million compared to $29.6
million in 2001.

As a result of the above,  the Company's  operating  income of $14.4 million for
the three months ended March 31, 2002 compared  unfavorably to $14.9 million for
the same period in 2001.

Net interest expense for the three months ended March 31, 2002 was $11.8 million
compared to $16.3 million for the  comparable  period in 2001.  The decrease was
due primarily to lower interest rates and the favorable  impact of the Company's
interest rate hedges.

The  provision  for income taxes of $0.2 million was provided for certain  state
and foreign  income tax  obligations.  The net  deferred tax assets at March 31,
2002 are fully  offset by a valuation  allowance.  The  Company  generated a net
taxable  operating  loss for federal and certain  state  income tax purposes for
which a full valuation allowance was provided.

Due to the factors stated above, the Company had net income for the three months
ended March 31, 2002 of $2.4 million which compared favorably to the net loss of
$1.5 million for the three months ended March 31, 2001.

Financial Condition, Liquidity and Capital Resources
----------------------------------------------------

At March 31, 2002,  the Company had cash and cash  equivalents of $21.7 million.
The Company's credit agreement  currently provides for a $70.0 million revolving
credit  facility,  which  allows the Company to borrow for  working  capital and
general corporate purposes, subject to certain conditions. As of March 31, 2002,
the Company had $61.0 million  outstanding  under the revolving  credit facility
leaving zero, after outstanding letters of credit, available under the revolving
credit  facility.  Certain  amounts  of the cash and cash  equivalents  of $21.7
million will be used against the  revolving  credit  facility  which will create
availability  under the  revolving  credit  facility  along  with cash flow from
operations to fund working capital and general corporate purposes.

Since  December 31, 2001,  cash and cash  equivalents  increased  $12.1  million
primarily due to cash from operating activities and portfolio purchasing of $5.4
million and  borrowings  under the  revolving  credit  facility of $15.0 million
offset by cash utilized for debt repayments of $4.4 million, payment of deferred
financing  fees of $1.5 million and capital  expenditures  of $2.4 million.  The
Company  also held $30.0  million of cash and cash  equivalents  for  clients in
restricted trust accounts at March 31, 2002.

In the quarter ended March 31, 2001,  cash and cash  equivalents  decreased $3.0
million  primarily  due to cash  utilized  for the  acquisition  of CCC of $16.3
million,  debt  repayments  of $2.6  million  and capital  expenditures  of $2.2
million  offset by cash from operating  activities  and portfolio  purchasing of
$3.3 million and increased  borrowings  under the revolving  credit  facility of
$14.9 million.

For the first three months in 2002,  the Company made  capital  expenditures  of
$2.4 million primarily for the replacement and upgrading of equipment, expansion
of facilities and expansion of the Company's  information  services systems. The
Company anticipates total capital spending of approximately $10.0 million during
2002.  Subject to compliance  with the  provisions of its debt  agreements,  the
Company  expects  to finance  future  capital  expenditures  with cash flow from
operations,  borrowings and capital  leases.  The Company will reduce its future
capital expenditures to the extent it is unable to fund its capital plan.

During the finalization of the Company's consolidated financial statements as of
and for the year ended  December 31,  2001,  the Company  identified  inaccurate
financial   reporting  of  certain   transactions   at  one  of  the   Company's
subsidiaries,   North  Shore  Agency,  Inc.  ("NSA").  The  Board  of  Directors
authorized the Audit and Compliance  Committee (the  "Committee")  to conduct an
independent  investigation,  with the assistance of special counsel  retained by
the  Committee,  to  identify  the  causes  of these  discrepancies  and to make
recommendations  to  ensure  similar  issues  do not  recur in the  future.  The
Committee retained Bryan Cave LLP as special counsel, and Bryan Cave LLP engaged
an independent  accounting firm to assist in the  investigation.  As a result of
the  investigation,  it was  determined  that  certain  assets  were  overstated
(primarily  accounts  receivable and prepaid postage) and trade accounts payable
was  understated  at NSA due to the  inaccurate  financial  reporting of certain
transactions.    Consequently,   the   Company   breached   certain   covenants,
representations  and  warranties  of  its  bank  credit  facility  (the  "Credit
Facility")  and  Warehouse  Facility.  See further  discussion  in the Company's
Annual Report of Form 10-K for the year ended December 31, 2001.

The  Company  and the  lenders  to the  Credit  Facility  amended  the  facility
effective  April  10,  2002.  The  amendment  to the  Credit  Facility  included
provisions  that amended the financial  covenants,  waived  certain  defaults of
covenants and breaches in representations and warranties, increased the interest
rate on borrowings  pursuant to the facility (as discussed  below),  and, during
2002,  reduced the Company's  availability  under its Credit Facility by $5,000,
and limited capital  expenditures,  investments and acquisitions.  In connection
with the amendment,  the Company also issued 4,150 shares of its Series B Junior
Preferred Stock with attached warrants to acquire 42,347 shares of the Company's
Senior Common Stock to Madison  Dearborn  Capital Partners III, L.P. and Madison
Dearborn  Special  Equity III, L.P. for a total  purchase  price of $4,150.  The
proceeds of this sale were used to repay the Revolving Facility in the amount of
$2,075 and the balance  pro-rata  to the Term A and B loans,  as provided in the
Credit Facility.  From April 10, 2002 until such time as the Company delivers to
the lenders a compliance  certificate  for the period  ended  December 31, 2002,
borrowings  under the Revolving  Facility and Term A Loan of the Credit Facility
will bear interest,  at the Company's option at (a) the lender's prime rate plus
2.75% or at (b) the Eurodollar rate plus 3.75%. Borrowings under the Term B Loan
will bear interest, at the Company's option, at (a) the lender's prime rate plus
3.50% or (b) the Eurodollar rate plus 4.50%.  The amortization and maturity were
not amended.  Following this  amendment,  the Company is in compliance  with the
Credit Facility and,  subject to the Warehouse  Facility issues discussed below,
expects to be in compliance throughout 2002.

The Company has received a waiver from the lender under the  Warehouse  Facility
for certain breaches of covenants,  representations  and warranties with respect
to periods  through the quarter ended March 31, 2002.  Since the Company,  on an
ongoing  basis,  will continue to be in breach of certain  financial  covenants,
representations  and warranties,  it has initiated  discussions  with the lender
under the  Warehouse  Facility for the purpose of seeking to amend such facility
to cure such breaches,  although there can be no assurance that the Company will
be successful in negotiating  such an amendment.  If the Company is unsuccessful
in  negotiating  such an amendment,  notwithstanding  the waiver  received,  the
Company may again breach certain  covenants,  representations  and warranties in
the  Warehouse  Facility  and there can be no  assurances  that the lender  will
extend the waiver to cover such  breaches.  On an ongoing  basis the Company has
also been  engaged  in  discussions  with  certain  other  providers  of similar
warehouse  facilities.  While there can be no assurances,  the Company  believes
that other  warehouse  facilities  would be available  on economic  terms and in
amounts  comparable to the Company's  existing  Warehouse  Facility  which would
allow the Company to continue its business of  purchasing  of loans and accounts
receivable.  In the event the Company is unable to amend the  current  Warehouse
Facility and it is  terminated  and the Company is unable to enter a replacement
warehouse facility, the Company would be in default of its Credit Facility.

Forward-Looking Statements
--------------------------

The  following  statements  in  this  entire  document  are  or  may  constitute
forward-looking  statements made in reliance upon the safe harbor of the Private
Securities  Litigation  Reform  Act  of  1995:  (1)  statements  concerning  the
anticipated   costs  and  outcome  of  legal   proceedings   and   environmental
liabilities,  (2)  statements  regarding  anticipated  changes  in the  accounts
receivable  management  industry,  including  but not  limited  to debt  levels,
delinquencies,  industry  consolidation,  customer consolidation and outsourcing
trends,  (3)  statements   regarding   anticipated   changes  in  the  Company's
opportunities in its industry,  including but not limited to  acquisitions,  (4)
statements regarding the Company's plans to reduce costs and improve operational
efficiencies,  (5) statements regarding the Company's ability to fund its future
operating  expenses and meet its debt service  requirements  as they become due,
(6)  statements  regarding  the  Company's  expected  capital  expenditures  and
facilities, (7) any statements preceded by, followed by or that include the word
"believes," "expects,"  "anticipates,"  "plans",  "intends," "should," "may," or
similar  expressions;  and (8) other  statements  contained or  incorporated  by
reference in this document regarding matters that are not historical facts.

Because such statements are subject to risks and  uncertainties,  actual results
may differ  materially from those  expressed or implied by such  forward-looking
statements.  Factors  that  could  cause  actual  results  to differ  materially
include, but are not limited to: (1) the demand for the Company's services,  (2)
the demand for accounts receivable management and the availability of portfolios
to purchase generally, (3) general economic conditions,  (4) changes in interest
rates,  (5)  competition,  including but not limited to pricing  pressures,  (6)
changes in governmental  regulations  including,  but not limited to the federal
Fair Debt  Collection  Practices Act and comparable  state  statutes,  (7) legal
proceedings, (8) environmental investigations and clean up efforts, (9) expected
synergies,  economies of scale and cost savings from recent  acquisitions by the
Company not being fully  realized or realized  within the expected  time frames,
(10)  costs of  operational  difficulties,  including  but not  limited to those
related to integrating  the operations of recently  acquired  companies with the
Company's operations being greater than expected, (11) unanticipated realignment
costs,  (12) the Company's  ability to generate cash flow or obtain financing to
fund its operations, service its indebtedness and continue its growth and expand
successfully  into new markets  and  services  either  through  acquisitions  or
internal growth,  (13) the Company's ability to amend its Warehouse  Facility to
cure  breaches  and defaults  thereunder  or to obtain  replacements  thereof on
acceptable  economic terms,  (14) changes in circumstances or the effects of new
accounting standards which may require the Company to consolidate FINCO into its
financial  statements,  and  (15)  factors  discussed  from  time to time in the
Company's public filings.

These forward-looking statements speak only as of the date they were made. These
cautionary  statements  should be considered  in connection  with any written or
oral  forward-looking  statements that the Company may issue in the future.  The
Company does not undertake any  obligation to release  publicly any revisions to
such  forward-looking  statements to reflect later events or circumstances or to
reflect the occurrence of unanticipated events.

<PAGE>

PAGE 16

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to the risk of  fluctuating  interest rates in the normal
course of business.  From time to time and as required by the  Company's  Credit
Facility,  the Company will employ derivative  financial  instruments as part of
its risk  management  program.  The  Company's  objective is to manage risks and
exposures and not to trade such instruments for profit or loss.

At December 31, 2001 (the most recent  completed  fiscal year),  the Company had
interest rate swap and collared swap agreements outstanding.  Since December 31,
2001, there have been no material changes in these agreements.


<PAGE>

PAGE 17

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

         From  time to time,  the Company and  certain of its  subsidiaries  are
         involved  in  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.
         Other  information  with respect  to legal  proceedings  appears in the
         Company's  Annual Report on Form 10-K  for the year ended  December 31,
         2001.


Item 2.  Changes in Securities

         None


Item 3.  Defaults Upon Senior Securities

         See Note 6 of the Consolidated  Financial Statements  and notes thereto
         contained in the Company's  Form 10-K for  the year ended  December 31,
         2001.


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 2  Unit Purchase Agreement, dated as of April 10, 2002, by
                         and  among  the  Company  and  certain   other  parties
                         thereto.

         (b). Reports on Form 8-K

              During the quarter,  the following  on Form 8-K was filed:
                         Report on Form 8-K filed March 21, 2002.

<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/ Gary L. Weller
                                         -------------------------------------
                                         Gary L. Weller
                                         Executive Vice President
                                            and Chief Financial Officer


Date:    May 15, 2002