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 September 30, 1997

   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 or organization)
390 South Woods Mill Road, Suite 150
       Chesterfield, Missouri                             63017
(Address of principal executive office)                 (Zip Code)
<PAGE>

   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 September 30, 1997, the following shares of the Registrant's common
   stock were issued and outstanding:

   Voting common stock                                    3,425,126.01
     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
                                                          5,256,866.59
   Transitional Small Disclosure _______(check one):  Yes  [ ]    No[X]
<PAGE>


                            OUTSOURCING SOLUTIONS INC.
                                 AND SUBSIDIARIES



                                      INDEX

   <TABLE>

     Part I. -    Financial Information
     <S>                                                                                                      <C>
        Item 1.   -   Financial Statements

                      Consolidated Balance Sheets
                      September 30, 1997 (unaudited) and December 31, 1996. . . . . . . . . . . .. . . . . . . 3

                      Consolidated Statements of Operations for the three and nine
                      month periods ended September 30, 1997 and 1996 (unaudited). . . . . . . . . . . . . . . 4


                      Consolidated Statements of Cash Flows for the nine
                      month periods ended September 30, 1997 and 1996 (unaudited). . . . . . . . . . . . . . . 5


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


        Item 2.   -   Management's Discussion and Analysis of Financial Condition
                      and Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8


     Part II.     -       Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

     </TABLE>
<PAGE>

   <TABLE>

                 OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

                 CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


                                                                                                SEPTEMBER 30,       DECEMBER 31,
                                                                                                        1997                1996

     <S>                                                                                                   <C>               <C>
     ASSETS                                                                                                   

                                                                                                              
     CURRENT ASSETS:                                                                                          
       Cash and cash equivalents                                                                       $ 8,883      $     14,497
       Cash and cash equivalents held for clients                                                       19,241            20,255
       Current portion of purchased loans and accounts receivable portfolios                            47,913            42,481
       Accounts receivable - trade, net of allowance for doubtful 
         receivables of $850 and $879, respectively                                                     22,939            20,738
       Deferred income taxes                                                                             8,196             2,617
       Other current assets                                                                              4,156             3,736
             Total current assets                                                                      111,328           104,324

     PURCHASED LOANS AND ACCOUNTS RECEIVABLE  PORTFOLIOS                                                23,868            25,519

     PROPERTY AND EQUIPMENT - Net                                                                       27,300            36,168

     GOODWILL - Less accumulated amortization of $7,095 and $2,986, respectively                       170,364           152,707

     OTHER INTANGIBLE ASSETS - Less accumulated amortization of $29,911 and $12,751, respectively        3,603            20,763

     DEFERRED FINANCING COSTS - Less accumulated amortization of $1,463 and $337, respectively          11,761            12,563

     DEFERRED INCOME TAXES                                                                              10,010             3,163

     TOTAL                                                                                          $  358,234          $355,207

     LIABILITIES AND STOCKHOLDERS' EQUITY

     CURRENT LIABILITIES:
       Accounts payable - trade                                                                     $    4,233            $6,495
       Collections due to clients                                                                       19,241            20,255
       Accrued severence and office closing costs                                                        9,855            11,938
       Accrued compensation                                                                              8,735             9,574
       Other current liabilities                                                                         1,200             4,289
       Accrued expenses                                                                                 16,523             3,378
       Current portion of long-term debt                                                                13,194            10,032
                Total current liabilities                                                               72,981            65,961

     LONG-TERM DEBT                                                                                    254,027           237,584

     OTHER LONG-TERM LIABILITIES                                                                            50                64

     STOCKHOLDERS' EQUITY:
       8% nonvoting cumulative redeemable exchangeable preferred stock; authorized 1,000,000 shares,
         935,886.85 and 865,280.01 shares, respectively, issued and outstanding, at liquidation value
         of $12.50 per share                                                                            11,699            10,816
       Voting common stock; $.01 par value; authorized 7,500,000 shares and 3,425,126.01
         shares, 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
<PAGE>

       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
       Additional paid-in capital                                                                       65,658            65,658
       Accumulated deficit                                                                            (46,234)          (24,929)
             Total stockholders' equity                                                                 31,176            51,598
                                                                                                              
     TOTAL                                                                                          $  358,234       $   355,207



     </TABLE>

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

   <TABLE>
                 OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES


                 CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 (IN THOUSANDS)


                                                                              THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                                SEPTEMBER 30,                 SEPTEMBER 30,
                                                                             1997           1996           1997           1996

                 <S>                                                      <C>           <C>             <C>         
                 REVENUES                                                    $  67,537    $  21,017       $  197,663   $  60,443  
                                                                                                     
                 EXPENSES:                                                                           
                   Salaries and benefits                                        32,218         8,896          97,018       23,060 
                   Service fees and other operating and
                     administrative expenses                                    16,314         6,063          49,882       17,000 
                   Amortization of loans and accounts
                     receivable purchased                                       13,138          7,868         31,174       20,586 
                   Amortization of goodwill and other intangibles                5,293          3,028         21,269       6,046  
                   Depreciation expense                                          2,558           320           7,615          876 
                                                                                      
                            Total expenses                                      69,521         26,175        206,958       67,568 

                                                                                                     
                 OPERATING LOSS                                                (1,984)        (5,158)        (9,295)       (7,125)
                                                                                                     
                 INTEREST EXPENSE - Net                                          7,153          1,864         20,950        5,645 
                                                                                                     
                 LOSS BEFORE INCOME TAXES                                      (9,137)        (7,022)       (30,245)     (12,770) 
                                                                                      
                 INCOME TAX BENEFIT                                            (2,797)        (1,892)        (9,626)       (4,424)
                                                                                                     
                 NET LOSS                                                      (6,340)        (5,130)       (20,619)       (8,346)

                 PREFERRED STOCK DIVIDEND
                   REQUIREMENTS                                                    266            200            686           613
                                                                                                     
                 NET LOSS TO COMMON STOCKHOLDERS                            $  (6,606)     $  (5,330)    $  (21,305)    $  (8,959)


                                           See notes to the unaudited consolidated financial statements.

     </TABLE>
<PAGE>


   <TABLE>
                OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES


                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                (IN THOUSANDS)

                                                                                                             NINE MONTHS ENDED
                                                                                                               SEPTEMBER 30,
                                                                                                             1997          1996

                <S>                                                                                      <C>            <C>         
                OPERATING ACTIVITIES:
                  Net loss                                                                                   $(20,619)  $(8,346)    
                  Adjustments to reconcile net loss to net cash                                                                     
                    provided by operating activities:                                                                               
                    Depreciation and amortization                                                               28,884         6,922
                    Amortization of loans and accounts receivable purchased                                     31,174        20,586
                    Deferred taxes                                                                             (9,626)       (4,444)
                    Change in assets and liabilities:                                                                               
                      Accounts receivable - trade                                                              (2,201)          (14)
                      Other current assets                                                                       (420)           -
                      Accounts payable, accrued expenses, and other current liabilities                       (10,773)         (120)
                          Net cash provided by operating activities                                             16,419        14,584

                INVESTING ACTIVITIES:                                                                                               
                  Payments for acquisitions - net of cash acquired                                                   -      (35,096)
                  Payment of prior acquisition costs                                                           (1,200)       (1,125)
                  Loans and accounts receivable purchased                                                     (34,955)       (8,299)
                  Acquisition of property and equipment                                                        (5,729)       (1,902)
                          Net cash used in investing activities                                               (41,884)      (46,422)
                FINANCING ACTIVITIES:                                                                                               
                  Proceeds from term loans                                                                           -        95,000
                  Repayments of term loans and capital lease obligations                                       (7,225)      (43,202)
                  Net proceeds from revolving credit facilities                                                 27,400         5,210
                  Repayment of notes payable to stockholders                                                         -      (35,012)
                  Other financing costs                                                                          (324)       (1,965)
                  Proceeds from issuance of stock                                                                    -        14,975
                          Net cash provided by financing activities                                             19,851        35,006
                NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                           (5,614)         3,168

                CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                  14,497         1,469
                CASH AND CASH EQUIVALENTS, END OF PERIOD                                                     $   8,883     $   4,637


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


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

   NOTE 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 and nine month periods ended September 30, 1997 are
   not necessarily indicative of the results that may be expected for the year
   ended December 31, 1997.  For purposes of comparability, certain prior
   year's amounts have been reclassified to conform with the current year
   presentation. For further information, refer to the Company's consolidated
   financial statements and footnotes thereto for the year ended December 31,
   1996.

   NOTE 2 - ORGANIZATION

   Pursuant to an Agreement and Plan of Merger, dated as of August 13, 1996
   the Company acquired Payco American Corp (Payco) on November 6, 1996 in a
   merger transaction for an aggregate cash consideration of approximately
   $150.2 million.  The assets and liabilities of Payco were recorded at their
   estimated fair market value and an amount equal to the excess of the
   purchase price over the fair value of assumed liabilities was allocated to
   property and equipment, identifiable tangible and intangible assets and
   goodwill.  Goodwill is being amortized over 30 years.  During the third
   quarter the Company finalized the purchase price allocation related to the
   acquisition of Payco. Based upon the final purchase price allocation,
   adjustments were made in the third quarter to: reduce the recorded  value
   of fixed assets by $7.0 million, increase the liability for certain pre-
   acquisition contingencies and planned exit costs incurred in conjunction
   with the acquisition by $16.4 million, increase the deferred tax asset
   created as a result of this adjustment by $2.8 million, and to record the
   resulting increase in goodwill of $20.6 million. A summary of the cash and
   non-cash components of the Payco acquisition after consideration of the
   aforementioned adjustments is as follows:

   Fair value of assets acquired, including 
   goodwill and transaction costs           $ 228,222

   Liabilities assumed                       (73,423)

   Cash purchase price                        154,799

   Acquired cash                              (5,711)

   Total cash paid, net of acquired cash     $149,088



   NOTE 3 - PURCHASED LOANS AND ACCOUNTS RECEIVABLE PORTFOLIOS AND
   AMORTIZATION

   During the three and nine month periods ended September 30, 1997 the
   Company purchased $10.0 million and $35.0 million of loans and accounts
   receivable portfolios, respectively.  The costs of purchased portfolios are
   generally amortized on an individual portfolio basis based on the ratio of
<PAGE>

   current collections to current and anticipated future collections for that
   portfolio.  Such portfolio cost is generally amortized over a three year
   period from the date of purchase based upon amounts collected.  In
   addition, as a result of having over two years of collection experience and
   data pertaining to certain purchased portfolios acquired in conjunction
   with the acquisition of Account Portfolios, L.P. in September 1995, the
   Company has commenced an in-depth analysis and evaluation of these
   portfolios.  This in-depth analysis of the purchased portfolios acquired in
   September 1995 will include an evaluation of the achieved portfolio
   amortization rates, historical and projected future costs to collect, as
   well as, projected future collection levels including estimated terminal
   values, if any.  The Company expects to complete this in-depth evaluation
   in the fourth quarter of fiscal 1997 and will determine the need to record
   additional amortization of these purchased portfolios, if any.


   NOTE 4 - LIABILITIES RECOGNIZED IN CONJUNCTION WITH THE PAYCO ACQUISITION

   At September 30, 1997 the company had a remaining liability provision in
   the amount of $13,599 related to certain planned exit, employee termination
   and relocation costs related to the integration of the Payco acquisition,
   of which $9,755 is included in "Accrued severance and office closing costs"
   and $5,944 is included in "Accrued expenses" in the accompanying
   consolidated balance sheet.

   Amounts funded related to liabilities provided related to the acquisition
   of Payco were $2,842 for the quarter ended September 30, 1997.  Of this
   amount, $2,310 was for planned exit costs, $402 was for severance payments
   and $130 was for relocation costs.  Amounts funded to these liabilities
   were $7,263 for the nine months ended September 30, 1997, of which $3,200
   was for planned exit costs, $3,033 was for severance payments, and $1,030
   was for relocation costs.


   NOTE 5 - SUPPLEMENTAL CASH FLOW INFORMATION

   Cash payments for interest during the periods ended September 30, 1997 and
   1996 were $12,146 and $5,103, respectively. 

   During the nine months ended September 30, 1997 and 1996, the Company
   issued 70,606.84 shares and 65,280 shares of preferred stock, respectively,
   in satisfaction of preferred stock dividends of $883 and $816,
   respectively. 

   During July 1997, a working capital adjustment resulting from the
   acquisition of A. M. Miller & Associates in January 1996 was agreed to with
   the seller which resulted in a reduction to the seller note (retroactively
   effective June 30, 1997) in the amount of $571.  As a result of this
   adjustment, a reduction to goodwill in the amount of $221 was recorded.


   NOTE 6 - SUBSEQUENT EVENTS

   On October 8, 1997 the Company entered into an amended bank credit facility
   ("Amended Credit Facility") which amended and restated the bank credit
   facility ("Credit Facility") entered into in November 1996.  The Amended
   Credit Facility allows for two borrowings up to an additional aggregate
   amount of $55,000 of Tranche B Term Loans to be used for specific potential
   acquisitions.  The unfunded Tranche B Term Loan Commitment expires
   immediately on November 10, 1997 if the acquisitions are not made on or
   before that date.  The maturity dates and interest rates under the Amended
   Credit Facility remain unchanged from the Credit Facility, however
   scheduled principal payments of Tranche B Term Loans increase effective
<PAGE>

   October 15, 1997 in the event additional borrowings are made to fund
   acquisitions. 

   On October 9, 1997, the Company acquired North Shore Agency, Inc. (NSA) for
   cash of $19,500 (before transaction costs of approximately $1,600).  The
   acquisition was funded with $22,000 of additional Tranche B Term Loans
   provided under the Amended Credit Facility described above.  The
   acquisition will be accounted for as a purchase with the costs of the
   acquisition to be allocated to the assets acquired and the liabilities
   assumed based on their estimated fair values at the date of acquisition.

   On November 10, 1997, the Company acquired Accelerated Bureau of
   Collections (ABC) for cash of $32,000 (before transaction costs of
   approximately $1,160).  The acquisition was funded with $33,000 of
   additional Tranche B Term Loans provided under the Amended Credit Facility
   described above.  The acquisition will be accounted for as a purchase with
   the costs of the acquisition to be allocated to the assets acquired and the
   liabilities assumed based on their estimated fair values at the date of
   acquisition.


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

   RESULTS OF OPERATIONS

   Three Months Ended September 30, 1997 Compared to Three Months Ended
   September 30, 1996

   Revenues for the three months ended September 30, 1997 were $67.5 million,
   compared to $21.0 million in the comparable period for 1996.  Revenues from
   contingent fee services were $48.5 million for the three months ended
   September 30, 1997 compared to $8.7 million in the comparable period in
   1996.  The increase in contingent fee revenues was a result of the
   acquisition of Payco in November 1996. Revenues generated from the
   collection of purchased loans and accounts receivable portfolios (purchased
   portfolios) increased to $19.0 million for the three months ended September
   30, 1997 compared to $12.3 million for the comparable period in 1996.  The
   increase in collections from purchased portfolios resulted from both an
   increase in purchased portfolio levels and related collection effort as
   well as from the Payco acquisition.  Revenues from outsourcing services
   increased to $16.8 million for the three months ended September 30, 1997
   compared to $0 in the comparable period in 1996.  The increase was due to
   the acquisition of Payco.

   Operating Expenses for the three months ended September 30, 1997 were $69.5
   million compared to $26.2 million for the comparable period in 1996, an
   increase of $43.3 million. Operating expenses, exclusive of amortization
   and depreciation charges, were $48.5 million for the three months ended
   September 30, 1997 and $15.0 million for the comparable period in 1996. 
   Operating expenses increased primarily as a result of the Payco
   acquisition.  Of the $69.5 million in expenses for the three months ended
   September 30, 1997, $13.1 million was attributable to amortization of the
   purchase price of purchased portfolios (compared to $7.9 million in 1996),
   $3.5 million was attributable to amortization of account inventory
   (compared to $2.5 million in 1996), $1.8 million was attributable to
   amortization of goodwill associated with the acquisitions of Account
   Portfolios, L.P. (API), A.M. Miller & Associates, Inc. (Miller),
   Continental Credit Services, Inc. (Continental) and Payco (compared to $0.5
   million in 1996) and $2.6 million was attributable to depreciation
   (compared to $0.3 million in 1996).  The increase in amortization and
   depreciation expense was the result of additional goodwill and step-up in
   basis of fixed assets recorded in connection with the Payco acquisition.
<PAGE>

   Operating Loss for the three months ended September 30, 1997 was $2.0
   million compared to $5.2 million for the comparable period in 1996.  The
   reduction in the operating loss was a result of increased revenues
   attributable to the acquisition of Payco partially offset by increased
   salaries and benefits, outside service fees and increased amortization
   related to the step-up in basis of purchased portfolios, goodwill and
   account inventory related to Payco.

   Operating earnings before interest expense, taxes, depreciation and
   amortization (EBITDA) for the three months ended September 30, 1997 was
   $19.0 million compared to $6.1 million for the comparable period in 1996. 
   The increase of $12.9 million in EBITDA reflects additional revenues
   associated with the acquisition of Payco and additional portfolios at API.

   Interest Expense, net for the three months ended September 30, 1997 was
   $7.2 million compared to $1.9 million for the comparable period in 1996. 
   The increase was primarily due to higher debt levels to finance the
   acquisition of Payco and to finance additional purchased portfolio
   purchases.

   Net Loss for the three months ended September 30, 1997 was $6.3 million
   compared to $5.1 million for the comparable period in 1996.  The increase
   in net loss resulted primarily from increased amortization expense from the
   step-up in basis of acquired portfolios, goodwill and account inventory
   recorded in connection with the acquisition of Payco and the increase in
   interest expense related to the indebtedness incurred to finance the Payco
   acquisition and purchased portfolio purchases.


   Nine Months Ended September 30, 1997 Compared to Nine Months Ended
   September 30, 1996

   Revenues for the nine months ended September 30, 1997 were $197.7 million,
   compared to $60.4 million in the comparable period for 1996.  Revenues from
   contingent fee services were $145.5 million for the nine months ended
   September 30, 1997 compared to $27.9 million in the comparable period in
   1996.  The increase in contingent fee revenues was a result of the
   acquisition of Payco in November 1996. Revenues generated from the
   collection of purchased portfolios increased to $52.1 million for the nine
   months ended September 30, 1997 compared to $34.6 million for the
   comparable period in 1996.  The increase in collections from purchased
   portfolios resulted from both an increase in purchased portfolio levels and
   related collection effort as well as from the Payco acquisition.  Revenues
   from outsourcing services increased to $48.3 million for the nine months
   ended September 30, 1997 compared to $0 in the comparable period in 1996. 
   The increase was due to the acquisition of Payco.

   Operating Expenses for the nine months ended September 30, 1997 were $207.0
   million compared to $67.6 million for the comparable period in 1996, an
   increase of $139.4 million. Operating expenses, exclusive of amortization
   and depreciation charges, were $146.9 million for the nine months ended
   September 30, 1997 and $40.1 million for the comparable period in 1996. 
   Operating expenses increased as a result of the Payco acquisition in
   addition to the use of outside collection agencies to service purchased
   portfolios.  Of the $207.0 million in expenses for the nine months ended
   September 30, 1997, $31.2 million was attributable to amortization of the
   purchase price of purchased portfolios(compared to $20.6 million in 1996),
   $15.5 million was attributable to amortization of account inventory
   (compared to $4.4 million in 1996), $5.8 million was attributable to
   amortization of goodwill associated with the acquisitions of API, Miller,
   Continental and Payco (compared to $1.6 million in 1996) and $7.6 million
   was attributable to depreciation (compared to $0.9 million in 1996).  The
   increase in amortization and depreciation expense was the result of
<PAGE>

   additional goodwill and step-up in basis of fixed assets recorded in
   connection with the Payco acquisition.

   Operating Loss for the nine months ended September 30, 1997 was $9.3
   million compared to $7.1 million for the comparable period in 1996.  The
   operating loss was a result of increased amortization related to the step-
   up in basis of purchased portfolios, goodwill and account inventory related
   to the acquisition of Payco.

   Operating earnings before interest expense, taxes, depreciation and
   amortization (EBITDA) for the nine months ended September 30, 1997 was
   $50.8 million compared to $20.4 million for the comparable period in 1996. 
   The increase of $30.4 million in EBITDA reflects additional revenues
   associated with the acquisition of Payco and additional portfolios at API,
   partially offset by the costs associated with the use of outside collection
   agencies to service purchased portfolios.

   Interest Expense, net for the nine months ended September 30, 1997 was
   $21.0 million compared to $5.6 million for the comparable period in 1996. 
   The increase was primarily due to higher debt levels to finance the
   acquisition of Payco and to finance additional purchased portfolio
   purchases.

   Net Loss for the nine months ended September 30, 1997 was $20.6 million
   compared to $8.3 million for the comparable period in 1996.  The increase
   in net loss resulted primarily from increased amortization expense from the
   step-up in basis of acquired portfolios, goodwill and account inventory
   recorded in connection with the acquisition of Payco and the increase in
   interest expense related to the indebtedness incurred to finance the Payco
   acquisition and purchased portfolio purchases.


   Financial Condition

   September 30, 1997 Compared to December 31, 1996

   Cash and Cash Equivalents decreased from $14.5 million at December 31, 1996
   to $8.9 million at September 30, 1997 principally due to the use of $41.9
   million for investing activities primarily for the purchase of portfolios,
   offset by cash provided by operations and financing activities of $16.6
   million and $19.7 million, respectively. The Company also held $19.2
   million of cash for clients in restricted accounts at September 30, 1997.

   Purchased Loans and Accounts Receivable Portfolios increased from $68.0
   million at December 31, 1996 to $71.8 million at September 30, 1997 due to
   new portfolio purchases of $35.0 million during the nine month period which
   were partially offset by amortization of purchased portfolios of $31.2
   million.  The amount of purchased loans and accounts receivable portfolios
   which were considered collectible within one year increased from $42.5
   million at December 31, 1996 to $47.9 million at September 30, 1997 mainly
   due to the timing of cash collections based on the relative age and length
   of ownership of the portfolios.

   The purchased loans and accounts receivable portfolios consist primarily of
   consumer loans and credit card receivables, commercial loans, student loan
   receivables and health club receivables.  Consumer loans purchased
   primarily consist of unsecured term debt.  A summary of purchased loans and
   accounts receivable portfolios at December 31, 1996 and September 30, 1997
   by type of receivable is shown below:


   <TABLE>
<PAGE>

                                                       December 31, 1996                           September 30, 1997
                                          Original Gross                                Original Gross
                                          Principal Value     Current      Long-term    Principal Value     Current   Long-term
                                           (in millions)          (in thousands)         (in millions)          (in thousands)
     <S>                                      <C>           <C>            <C>             <C>            <C>            <C>
     Consumer loans . . . . . .                 $1,770      $  7,445        $  4,592         $2,051        $11,419         $3,803
     Student loans . . . . . . . .                 322         7,456           4,699            322          7,462              -
     Credit cards . . . . . . . . .                101         2,359           1,453            470          7,073          9,451
     Health clubs . . . . . . . . .                954        23,364          13,865          1,271         19,416          8,489
     Commercial . . . . . . . . .                   41         1,857             910             17          2,543          2,125
                                                $3,188       $42,481         $25,519         $4,131        $47,913        $23,868

     </TABLE>


   Most of the portfolio purchases involve tertiary paper (i.e. accounts more
   than 360 days past due which have been previously placed with a contingent
   fee servicer) with the exception of portfolios purchased under forward flow
   agreements under which the Company agrees to purchase charged off credit
   card and health club receivables on a monthly basis as they become due.

   Deferred Taxes increased from an asset of $5.8 million at December 31, 1996
   to an asset of $15.7 million at September 30, 1997.  The net deferred tax
   asset at September 30, 1997 and December 31, 1996 relates principally to
   net operating loss carryforwards. The realization of this asset is
   dependent on generating sufficient taxable income prior to expiration of
   the loss carryforwards in years through 2012.  Management has analyzed the
   potential sources of taxable income available to realize the deferred tax
   asset. The principal assumptions underlying management's current
   determination that the asset will be realized and there is no need for a
   valuation allowance are that the earning history of the acquired operations
   will continue (no improvement has been assumed).  The more significant non-
   recurring and unusual items reflected in operating results are additional
   amortization of purchased loans and receivable portfolios resulting from
   the step up in recorded value to fair value, amortization of account
   inventory, additional financing costs expensed in connection with the
   refinancing, and other one time expenses.  Currently this level of
   amortization is not expected to continue beyond fiscal 1998.  In addition,
   the Company during the fourth quarter of fiscal 1997 will be finalizing its
   operating business plan for fiscal 1998 and beyond including potential
   acquisitions, if any, and the impact on the Company's operations and
   capital structure.  As a result of this planning process, the Company will
   continue to assess the realization of the net deferred tax asset as well as
   the need for a valuation allowance, if any.

   The Long Term Portion of Notes Payable increased from $237.6 million at
   December 31, 1996 to $254.0 million at September 30, 1997.  The increase
   was primarily due to revolver borrowings of $27.4 million used to finance
   purchased portfolio acquisitions which was offset by principal payments and
   reductions of principal of $7.2 million and the increase in the current
   portion of long-term debt of $3.2 million.

   Stockholders' Equity decreased from $51.6 million at December 31, 1996 to
   $31.2 million at September 30, 1997 due to the net loss to common
   stockholders incurred for the nine month period of $21.3 million, partially
   offset by an increase in preferred stock of $0.9 million.

   Liquidity and Capital Resources 

   As of September 30, 1997, the Company had cash and cash equivalents of $8.9
   million.  The Company derives substantially all of its cash flow from the
   operations of its subsidiaries.  Capital expenditures were $5.7 million for
   the nine month period ended September 30, 1997.  Portfolio purchases were
<PAGE>

   $35.0 million for the nine month period ended September 30, 1997.  The
   Company had working capital of $38.5 million at September 30, 1997.

   Of the $5.7 million of capital expenditures for the nine months ended
   September 30, 1997, $3.9 million represents data processing capital
   expenditures and $1.8 million was for other capital expenditures, which
   include telecommunications equipment, leasehold improvements, other
   computer equipment and office furniture and equipment.

   The Company's debt structure consists of senior debt under the Bank Credit
   Facility (the Credit Facility) of $139.6 million, indebtedness represented
   by 11% Senior Subordinated Notes (The Senior Notes) of $100.0 million and
   other indebtedness of $4.4 million. Under the Credit Facility, the Company
   has the ability to borrow an additional $30.6 million (net of outstanding
   revolver borrowings of $27.4 million at September 30, 1997) for working
   capital, general corporate purposes and acquisitions, subject to certain
   conditions.  See Note 6 to the unaudited consolidated financial statements
   for a description of the amended bank credit facility effective October 8,
   1997 which provides additional financing for the NSA and ABC acquisitions.

   The Senior Notes and the Credit Facility contain financial and operating
   covenants and restrictions on the ability of the Company to incur
   indebtedness, make investments and take certain other corporate actions. 
   The debt service requirements associated with the borrowings under the
   Credit Facility and the Senior Notes significantly impact the Company's
   liquidity requirements.  The Company anticipates that its operating cash
   flow together with borrowings under the Credit Facility will be sufficient
   to meet its anticipated future operating expenses and to meet its debt
   service requirements as they become due.  Additionally, future portfolio
   purchases may require significant financing or investment.  However, actual
   capital requirements may change, particularly as a result of acquisitions
   the Company may make.  The ability of the Company to meet its debt service
   obligations and reduce its total debt will be dependent, however, upon the
   future performance of the Company and its subsidiaries which, in turn, will
   be subject to general economic conditions and to financial, business and
   other factors including factors beyond the Company's control.


   Inflation

   The Company believes that inflation has not had a material impact on its
   results of operations for the three and nine month periods ended September
   30, 1997.


   PART II - OTHER INFORMATION

   ITEM 1.  LEGAL PROCEEDINGS

   As described in the Company's March 31, 1997 10-Q filing, Payco and its
   wholly owned subsidiary Payco-General American Credits, Inc. ("Payco") are
   party to a class action lawsuit filed in July 1996 by Jimmy Rogers, Lillian
   H. Rogers, Randy Humphrey, Nancy Humphrey, Carl Christopher, David Clapper
   and Virginia Clapper, as individuals and as class representatives, in the
   Circuit Court of Etowah County, Alabama.  On September 16, 1997, the
   Circuit Court entered an order certifying the case as a class action. 
   Following this certification order, Payco applied to the Alabama Supreme
   Court for a writ of mandamus to enjoin the case from proceeding as a class
   action and for an emergency stay of the Circuit Court proceedings.  The
   Alabama Supreme Court granted the emergency stay and ordered a response to
   the application for a writ of mandamus.  Payco subsequently negotiated a
   settlement with the plaintiff class, and the Alabama Supreme Court lifted
   the emergency stay for the purpose of allowing the Circuit Court to
<PAGE>

   consider approval of this class settlement.  The Circuit Court has
   preliminarily approved the class settlement and set a hearing on final
   approval for November 18, 1997.  Under the class settlement, Payco agreed
   in principle to pay an amount in cash to individual class members that
   submit a claim under procedures described in the settlement papers; to make
   credit counseling services available to individual class members; and to
   pay attorneys' fees to class counsel.  The amount the Company has agreed to
   pay is not material to the operations or financial condition of the
   Company.  Transamerica Business Credit Corporation ("TBCC"), however, has
   opposed the class settlement and moved the Alabama Supreme Court for leave
   to continue discovery on TBCC's cross-claims against Payco.  The Company
   believes that it has meritorious defenses to the cross-claim in this suit
   and believes that the outcome of this litigation will not have a material
   adverse effect on the operations or the financial condition of the Company.

   There have been no further developments in the FTC inquiry at API.


   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

          2.1       Purchase Agreement dated October 31, 1996 by and among
                    the Company, CFC Services Corp., A.M. Miller &
                    Associates, Inc., Continental Credit Services, Inc.,
                    Alaska Financial Services, Inc., Southwest Credit
                    Services, Inc., Account Portfolios, Inc., Account
                    Portfolios G.P., Inc., Account Portfolios, L.P.,
                    Perimeter Credit, L.P., Gulf State Credit, L.P. and
                    Goldman Sachs & Co. and Chase Securities Inc.
                    (incorporated by reference to the Company's Registration
                    Statement on Form S-4 as filed on December 5, 1996).

          2.2       Agreement and Plan of Merger dated as of August 13, 1996
                    by and among the Company, Boxer Acquisition Corp. and
                    Payco American Corporation (incorporated by reference to
                    the Company's Registration Statement on Form S-4 as filed
                    with the Commission on December 5, 1996).

          2.3       Purchase Agreement dated as of September 21, 1995 by and
                    among the Company, Account Portfolios, Inc., Account
                    Portfolios G.P., Inc., AP Management, Inc., GSC
                    Management, Inc., Perimeter Credit Management
                    Corporation, Account Portfolios Trust One and Account
                    Portfolios Trust Two (incorporated by reference to the
                    Company's Registration Statement on Form S-4 as filed
                    with the Commission on December 5, 1996).
<PAGE>

          2.4       Stock Purchase Agreement dated as of January 10, 1996 by
                    and among the Company, The Continental Alliance, Inc. and
                    Peter C. Rosvall (incorporated by reference to the
                    Company's Registration Statement on Form S-4 as filed
                    with the Commission on December 5, 1996).

          2.5       Stock Purchase Agreement dated as of December 13, 1995 by
                    and among the Company, Outsourcing Solutions
                    Incorporated, A.M. Miller & Associates, Inc. and Alan M.
                    Miller (incorporated by reference to the Company's
                    Registration Statement on Form S-4 as filed with the
                    Commission on December 5, 1996).

          2.6       Purchase and Inducement Agreement dated as of May 17,
                    1996 by and among the Company, Account Portfolios, Inc.,
                    Account Portfolios, L.P., Gulf State Credit, L.P.,
                    Perimeter Credit, L.P., MLQ Investors, L.P. and Goldman,
                    Sachs & Co (incorporated by reference to the Company's
                    Registration Statement on Form S-4 as filed with the
                    Commission on December 5, 1996).

          3.1       Certificate of Incorporation of the Company, as amended
                    to date, filed with the Secretary of State of the State
                    of Delaware on September 21, 1995 (incorporated by
                    reference to the Company's Registration Statement on Form
                    S-4 as filed with the Commission on December 5, 1996).

          3.2       By-laws of the Company (incorporated by reference to the
                    Company's Registration Statement on Form S-4 as filed
                    with the Commission on December 5, 1996).

          4.1       Indenture dated as of November 6, 1996 by and among the
                    Company, the Guarantors and Wilmington Trust Company (the
                    "Indenture") (incorporated by reference to the Company's
                    Registration Statement on Form S-4 as filed with the
                    Commission on December 5, 1996).

          4.2       Specimen Certificate of 11% Senior Subordinated Note due
                    2006 (included in Exhibit 4.1 hereto) (incorporated by
                    reference to the Company's Registration Statement on Form
                    S-4 as filed with the Commission on December 5, 1996).

          4.3       Specimen Certificate of 11% Series B Subordinated Note
                    due 2006 (the "New Notes") (included in Exhibit 4.1
                    hereto) (incorporated by reference to the Company's
                    Registration Statement on Form S-4 as filed with the
                    Commission on December 5, 1996).

          4.4       Form of Guarantee of securities issued pursuant to the
                    Indenture (included in Exhibit 4.1 hereto) (incorporated
                    by reference to the Company's Registration Statement on
                    Form S-4 as filed with the Commission on December 5,
                    1996).

          10.1      Amended and Restated Stockholders Agreement dated as of
                    February 16, 1996 by and among the Company and various
                    stockholders of the Company (incorporated by reference to
                    the Company's Registration Statement on Form S-4 as filed
                    with the Commission on December 5, 1996).

          10.2      Advisory Services Agreement dated September 21, 1995
                    between the Company and MDC Management Company III, L.P.
                    (incorporated by reference to the Company's Registration
<PAGE>

                    Statement on Form S-4 as filed with the Commission on
                    December 5, 1996)

          10.3      Master Services Agreement dated as of October 1, 1992
                    between Account Portfolios L.P. and HBR Capital, Ltd.
                    (incorporated by reference to the Company's Registration
                    Statement on Form S-4 as filed with the Commission on
                    December 5, 1996).

          10.4      Amended Credit Agreement dated as of October 8, 1997 by
                    and among the Company, the Lenders listed therein,
                    Goldman Sachs Credit Partners L.P. and the Chase
                    Manhattan Bank, as Co-Administrative Agents, Goldman
                    Sachs Credit Partners L.P. and Chase Securities, Inc., as
                    Arranging Agents and Suntrust Bank, Atlanta as Collateral
                    Agent and Exhibits thereto.

          10.5      Amended Employment Agreement dated as of August 27, 1997
                    between the Company and Timothy G. Beffa


          27.       Financial Data Schedule (Unaudited)

        (b)       Reports on Form 8-K

          There were no reports on Form 8-K filed for the three month period
          ended September 30, 1997.
<PAGE>


                                    SIGNATURES

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



                                 OUTSOURCING SOLUTIONS INC.
                                     (Registrant)



   Date:  November 14, 1997      /s/   DANIEL J. DOLAN
                                 ---------------------------------------------
                                 Daniel J. Dolan
                                 Executive Vice President
                                    and Chief Financial Officer



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