SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

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

For the quarterly period ended          September 30, 1999
                               -------------------------------------

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 Identification Number)
   incorporation or organization)

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

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

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  issuer's  classes of
common stock as of the latest practicable date.
                                                        Outstanding at
               Class                                 September 30, 1999
------------------------------------------         ----------------------
Voting common stock                                     3,477,126.01
Class A convertible nonvoting common stock                391,740.58
Class B convertible nonvoting common stock                400,000.00
Class C convertible nonvoting common stock              1,040,000.00
                                                        ------------
                                                        5,308,866.59
                                                        ============

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





<PAGE>


PAGE 2


                       OUTSOURCING SOLUTIONS INC.
                            AND SUBSIDIARIES



                            TABLE OF CONTENTS


Part I.   Financial Information                                             Page

   Item 1.  Financial Statements

            Condensed Consolidated Balance Sheets
            September 30, 1999 (unaudited) and December 31, 1998...........    3


            Condensed Consolidated Statements of Operations for the three
            and nine months ended September 30, 1999 and 1998 (unaudited)..    4


            Condensed Consolidated Statements of Cash Flows for the nine
            months ended September 30, 1999 and 1998 (unaudited)...........    5


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


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


   Item 3.  Quantitative and Qualitative Disclosures About Market Risk.....   14



Part II.    Other Information..............................................   14


<PAGE>
PAGE 3

OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share amounts)
------------------------------------------------
<TABLE>
<CAPTION>
                                                   September 30,   December 31,
                                                        1999           1998
                                                     Unaudited       Audited
                                                   -------------   ------------
ASSETS

CURRENT ASSETS:
<S>                                                  <C>            <C>
    Cash and cash equivalents                        $   4,836      $   8,814
    Cash and cash equivalents held for clients          23,771         22,372
    Current portion of purchased loans and
      accounts receivable portfolios                    29,772         35,057
    Accounts receivable - trade, less allowance
      for doubtful receivables of $706 and $1,309       46,415         40,724
    Other current assets                                10,754          8,777
                                                     ---------      ---------
       Total current assets                            115,548        115,744

PURCHASED LOANS AND ACCOUNTS RECEIVABLE PORTFOLIOS      11,115         20,436

PROPERTY AND EQUIPMENT, net                             43,279         40,317

INTANGIBLE ASSETS, net                                 414,388        425,597

DEFERRED FINANCING COSTS, net                           11,379         13,573

OTHER ASSETS                                             5,212          2,824
                                                     ---------      ---------
TOTAL                                                $ 600,921      $ 618,491
                                                     =========      =========
LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
    Accounts payable - trade                         $   6,740      $   7,355
    Collections due to clients                          23,771         22,372
    Accrued salaries, wages and benefits                13,134         13,274
    Other current liabilities                           46,416         55,071
    Current portion of long-term debt                   19,640         16,877
                                                     ---------      ---------
       Total current liabilities                       109,701        114,949

LONG-TERM DEBT                                         510,408        511,271

OTHER LONG-TERM LIABILITIES                             21,602         22,303

STOCKHOLDERS' DEFICIT:
    8% nonvoting cumulative redeemable exchangeable     13,686         12,167
      preferred stock; authorized 1,250,000 and
      1,000,000 shares, respectively; 1,094,855.24
      and 973,322.32 shares, respectively, issued
      and outstanding, at liquidation value of
      $12.50 per share
    Voting common stock; $.01 par value; authorized         35             35
      7,500,000 shares, 3,477,126.01 shares issued
      and outstanding
    Class A convertible nonvoting common stock; $.01         4              4
      par value; authorized 7,500,000 shares,
      391,740.58 shares issued and outstanding
    Class B convertible nonvoting common stock; $.01         4              4
      par value; authorized 500,000 shares, 400,000
      shares issued and outstanding
    Class C convertible nonvoting common stock; $.01        10             10
      par value; authorized 1,500,000 shares,
      1,040,000 shares issued and outstanding
    Paid-in capital                                     66,958         66,958
    Retained deficit                                  (121,487)      (109,210)
                                                     ---------      ---------
       Total stockholders' deficit                     (40,790)       (30,032)
                                                     ---------      ---------
TOTAL                                                $ 600,921      $ 618,491
                                                     =========      =========
</TABLE>
          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)
----------------------------------------------------------
<TABLE>
<CAPTION>

                                                                          Three Months Ended         Nine Months Ended
                                                                             September 30,             September 30,
                                                                          -------------------        -----------------
                                                                            1999       1998            1999       1998

<S>                                                                      <C>         <C>             <C>        <C>
REVENUES                                                                 $122,987    $119,903        $380,063   $358,634

EXPENSES:
    Salaries and benefits                                                  60,076      58,050         182,238    171,203
    Service fees and other operating and administrative expenses           37,440      35,130         117,334    105,100
    Amortization of loans and accounts receivable purchased                 9,317      12,840          29,794     35,198
    Amortization of goodwill and other intangibles                          4,112       4,045          12,316     11,588
    Depreciation expense                                                    3,735       3,486          10,960      9,963
                                                                         --------    --------        --------   --------
         Total expenses                                                   114,680     113,551         352,642    333,052
                                                                         --------    --------        --------   --------
OPERATING INCOME                                                            8,307       6,352          27,421     25,582

OTHER EXPENSE                                                                   -           -              76          -

INTEREST EXPENSE - Net                                                     13,005      13,164          38,214     37,554
                                                                         --------    --------        --------   --------
LOSS BEFORE INCOME TAXES AND MINORITY INTEREST                             (4,698)     (6,812)        (10,869)   (11,972)

PROVISION FOR INCOME TAXES                                                      -           -             375          -

MINORITY INTEREST                                                               -           -               -        572
                                                                         --------    --------        --------   --------
NET LOSS                                                                   (4,698)     (6,812)        (11,244)   (12,544)

PREFERRED STOCK DIVIDEND REQUIREMENTS                                         527         162           1,033        639
                                                                         --------    --------        --------   --------
NET LOSS TO COMMON STOCKHOLDERS                                          $ (5,225)   $ (6,974)       $(12,277)  $(13,183)
                                                                         ========    ========        ========   ========



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

</TABLE>


<PAGE>


PAGE 5


OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands except share amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                              Nine Months Ended
                                                                September 30,
                                                             -------------------
                                                               1999       1998
OPERATING ACTIVITIES:
<S>                                                         <C>        <C>
    Net loss                                                $(11,244)  $(12,544)
    Adjustments to reconcile net loss to net cash
      from operating activities:
        Depreciation and amortization                         25,645     23,654
        Amortization of loans and accounts receivable         29,794     35,198
          purchased
        Other                                                     76          -
        Minority interest                                          -        572
        Change in assets and liabilities:
          Other current assets                                (7,783)     5,256
          Accounts payable and other liabilities              (9,625)   (10,122)
                                                            --------   --------
            Net cash from operating activities                26,863     42,014
                                                            --------   --------
INVESTING ACTIVITIES:
    Payments for acquisitions, net of cash acquired             (877)  (167,305)
    Purchase of loans and accounts receivable portfolios     (15,188)   (38,030)
    Acquisition of property and equipment                    (14,163)   (10,794)
    Investment in non-consolidated subsidiary                 (2,500)         -
    Other                                                        269          -
                                                            --------   --------
            Net cash from investing activities               (32,459)  (216,129)
                                                            --------   --------
FINANCING ACTIVITIES:
    Proceeds from term loans                                       -    225,469
    Borrowings under revolving credit agreement              223,150    168,050
    Repayments under revolving credit agreement             (208,750)  (177,900)
    Repayments of debt                                       (12,607)   (32,327)
    Deferred financing fees                                     (175)    (3,038)
                                                            --------   --------
            Net cash from financing activities                 1,618    180,254
                                                            --------   --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS          (3,978)     6,139

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                 8,814      3,217
                                                            --------   --------
CASH AND CASH EQUIVALENTS, END OF PERIOD                    $  4,836   $  9,356
                                                            ========   ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid during period for interest                    $ 33,264   $ 28,407
                                                            ========   ========
    Net cash paid  (received) during period for taxes       $    158   $ (8,011)
                                                            ========   ========
</TABLE>

SUPPLEMENTAL  DISCLOSURE OF NONCASH INVESTING AND FINANCING  ACTIVITIES - During
the nine months ended  September 30, 1999 and 1998,  the Company paid  preferred
stock  dividends  of $1,519 and $468,  respectively,  through  the  issuance  of
121,532.92 shares and 37,435.47 shares of preferred stock, respectively.


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



<PAGE>


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

NOTE 1.  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  Operating  results for the three and nine months ended September
30, 1999 are not necessarily  indicative of the results that may be expected for
the year ended December 31, 1999. For purposes of  comparability,  certain prior
year amounts have been reclassified to conform to current quarter  presentation.
These Condensed  Consolidated Financial Statements should be read in conjunction
with the Consolidated  Financial  Statements and notes thereto  contained in the
Company's Form 10-K for the year ended December 31, 1998.

Comprehensive  loss for the periods  presented  were equal to the  Company's net
loss as the Company had no comprehensive income (loss) items.


NOTE 2.  ACQUISITION

On January 23, 1998, the Company acquired through a tender offer,  approximately
77% of the outstanding shares of The Union Corporation's  ("Union") common stock
for $31.50 per share.  On March 31, 1998,  the Company  acquired  the  remaining
outstanding  shares  of  Union.  The  aggregate  purchase  price  of  the  Union
acquisition was approximately  $220,000  including  transaction costs of $10,900
and assumed  liabilities.  The Company  financed the acquisition  primarily with
funds provided by an amended credit  agreement.  Union,  through  certain of its
subsidiaries,  furnished  a broad  range of credit  and  receivables  management
outsourcing   services  as  well  as  management   and  collection  of  accounts
receivable.  The  acquisition  was  accounted  for under the purchase  method of
accounting.  The Company allocated the total purchase price including additional
liabilities  reserves to the fair value of the net assets acquired  resulting in
goodwill of  approximately  $219,000.  The goodwill is being  amortized  over 30
years using the straight-line  method.  Union's  consolidated  operating results
have been included in the Company's consolidated results since January 23, 1998,
recognizing   the  minority   interest   through  the  completion  date  of  the
acquisition.

The unaudited  proforma  consolidated  financial data  presented  below provides
proforma effect of the Union  acquisition as if such acquisition had occurred as
of the  beginning  of each period  presented.  The  unaudited  results have been
prepared  for  comparative  purposes  only and do not  necessarily  reflect  the
results of operations  of the Company that actually  would have occurred had the
acquisition been consummated as of the beginning of each period  presented,  nor
does the data give effect to any transactions other than the acquisition.

                                          For the nine months
                                           ended September 30,
                                     --------------------------------
                                           1999          1998
                                          ------        ------
                  Revenues              $ 380,063     $ 365,988
                                        =========     =========
                  Net loss              $( 11,244)    $ (13,665)
                                        =========     =========

NOTE 3.  DEBT

In January 1998, the Company  finalized the Second  Amended and Restated  Credit
Agreement for $466,663 (the "Agreement") with a group of banks to fund the Union
acquisition and refinance existing outstanding  indebtedness.  The Agreement, as
amended,  consists  of a $408,663  term loan  facility  and a $58,000  Revolving
Credit Facility (the "Revolving Facility"). The term loan facility consists of a
term loan of $59,187  ("Term Loan A"), a term loan of  $124,476  ("Term Loan B")
and a term loan of $225,000  ("Term Loan C"),  which mature on October 15, 2001,
2003 and 2004, respectively. The Company is required to make quarterly principal
repayments  on each term  loan.  Term Loan A bears  interest,  at the  Company's
option,  (a) at a base rate equal to the greater of the federal  funds rate plus
0.5% or the  lender's  customary  base  rate  plus  1.5%  or (b) at the  reserve
adjusted  Eurodollar  rate plus 2.5%. Term Loan B and Term Loan C bear interest,
at the Company's option,  (a) at a base rate equal to the greater of the federal
funds rate plus 0.5% or the lender's  customary  base rate,  plus 2.0% or (b) at
the reserve adjusted Eurodollar rate plus 3.0%.

The  Revolving  Facility  originally  had a term  of  five  years  and is  fully
revolving until October 15, 2001. The Revolving Facility bears interest,  at the
Company's  option,  (a) at a base rate equal to the greater of the federal funds
rate  plus  0.5% or the  lender's  customary  base  rate plus 1.5% or (b) at the
reserve  adjusted  Eurodollar  rate  plus  2.5%.  Also,  outstanding  under  the
Revolving Facility are letters of credit of $2,025.

The  Agreement  is  guaranteed  by  all  of  the  Company's   present   domestic
subsidiaries  and  is  secured  by all of the  stock  of the  Company's  present
domestic  subsidiaries  and  by  substantially  all of  the  Company's  domestic
property  assets except for OSI Funding Corp. as discussed in Note 6 below.  The
Agreement  contains  certain  covenants the more significant of which limit cash
dividends,  asset sales,  acquisitions and additional  indebtedness,  as well as
requires the Company to satisfy certain financial performance ratios.


NOTE 4.  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 Union
acquisition, 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,  has 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
September 30, 1999.


NOTE 5.  8% NONVOTING CUMULATIVE REDEEMABLE EXCHANGEABLE PREFERRED STOCK

In January 1999, the Company  increased its  authorized 8% Nonvoting  Cumulative
Redeemable  Exchangeable  Preferred  Stock from  1,000,000  shares to  1,250,000
shares.

NOTE 6.  PURCHASED LOANS AND ACCOUNTS RECEIVABLE PORTFOLIOS FINANCING

In October 1998, a qualifying special-purpose finance company, OSI Funding Corp.
("FINCO"),  formed by the Company,  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 over its five year
term. In connection  with the  establishment  of the Warehouse  Facility,  FINCO
entered into a servicing  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) at prevailing market rates based
on the nature and age of outstanding balances to be collected. Servicing revenue
from FINCO is recognized by the company as collections are received.

The following  summarizes the transactions between the Company and FINCO for the
three and nine months ended September 30, 1999:
<TABLE>
<CAPTION>

                                                  For the Three    For the Nine
                                                   Months Ended    Months Ended
                                                  September 30,    September 30,
                                                       1999            1999
                                                  ---------------  -------------
<S>                                                   <C>             <C>
    Sales of purchased loans and accounts
    receivable portfolios by the Company to FINCO     $15,161         $44,485

    Servicing fees paid by FINCO to the Company        $3,913          $9,758

</TABLE>

Sales of purchased  loans and accounts  receivable  portfolios by the Company to
FINCO were in the same amount and occurred  shortly after such  portfolios  were
acquired by the Company from the various unrelated sellers. Accordingly, no gain
or loss was recorded by the Company on the sales to FINCO.

At September 30, 1999, FINCO had outstanding borrowings of $35,287.


NOTE 7.   SUBSEQUENT EVENT

The Company, Madison Dearborn Capital Partners III, L.P. ("MDP"), and certain of
the Company's stockholders, optionholders and warrantholders have entered into a
Stock  Subscription  and  Redemption  Agreement,  dated as of  October  8, 1999,
pursuant  to  which  MDP  will  acquire  a  controlling   interest  in  OSI  for
approximately $790 million and most of the currently  outstanding  capital stock
of OSI  will be  redeemed  (the  "Recapitalization").  The  Recapitalization  is
expected to be completed by December 31, 1999. The Company is pursuing a consent
solicitation from the holders of its existing  $100,000 11% Senior  Subordinated
Notes to obtain a waiver of the Change of Control  provision of the Indenture in
connection with the transaction.

<PAGE>


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

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

Three Months Ended September 30, 1999 Compared to Three Months Ended
September 30, 1998
--------------------------------------------------------------------

Revenues  for the three  months  ended  September  30, 1999 were $123.0  million
compared  to $119.9  million in the same period last year - an increase of 2.6%.
The  revenue  increase  of $3.1  million  was due to  increased  collection  and
outsourcing  services  revenue  offset  partially  by lower  portfolio  services
revenue, which resulted from the establishment of OSI Funding Corp. ("FINCO"), a
qualifying  special-purpose  non-recourse financing company, as discussed below.
Revenues from collection  services were $88.2 million for the three months ended
September 30, 1999 compared to $87.4 million in the  comparable  period in 1998.
The increase in collection  services revenues was due to an increase in existing
net placements  offset by the continued  pressure on contingent fee rates in the
highly competitive  business.  The outsourcing services revenue of $15.1 million
compared  favorably to prior year of $12.6 million due to increased revenue from
new and existing business. Revenues from portfolio services decreased from $19.9
million for the three months ended  September  30, 1998 to $19.7 million for the
three months ended  September 30, 1999. The decreased  revenue was due primarily
to the negative revenue effect of FINCO,  which was formed in the fourth quarter
of 1998 for the purpose of  financing  acquired  loans and  accounts  receivable
portfolios.  Prior to forming  FINCO,  the Company  would  record as revenue the
total  collections  on  purchased  portfolios.   Currently,  for  all  purchased
portfolios  which are sold to and  financed  by FINCO,  the  Company  records as
revenue a servicing fee on the total collections of FINCO purchased  portfolios.
During the quarter ended September 30, 1999, the Company  recorded  revenue from
FINCO servicing fees of $3.9 million on total collections of $10.7 million. When
compared to the three months ended September 30, 1998, the total  collections of
both on and off-balance sheet purchased portfolios, increased from $19.9 million
in 1998 to $26.5  million  in 1999,  an  increase  of 33% or $6.6  million.  The
increased collections resulted primarily from an increase in the total levels of
purchased portfolios primarily as a result of the increased buying capacity made
available through FINCO. If all portfolios purchased by FINCO were accounted for
on-balance sheet, the Company would have reported   revenues,   including  total
collections of portfolios,  of $129.8 million,  as compared to $119.9 million in
1998, an 8.3% increase.

Operating  expenses,  exclusive of amortization and depreciation  charges,  were
$97.5  million for the three months ended  September  30, 1999 and $93.2 million
for the  comparable  period  in 1998 - an  increase  of 4.7%.  The  increase  in
operating expenses, exclusive of amortization and depreciation charges, resulted
primarily from higher collection-related  expenses associated with the increased
revenues of collection and outsourcing  services,  increased  collection-related
expenses  associated  with the increase in collections of purchased  portfolios,
infrastructure  costs as the Company aligns collection  services by industry and
related increases in advertising and promotional expenses.  For the three months
ended September 30, 1999, amortization and depreciation charges of $17.2 million
compared  to $20.4  million for the same period last year - a decrease of 15.7%.
The lower  amortization  charges resulted  primarily from lower on-balance sheet
portfolio  amortization  as the  majority of  portfolio  purchases  were sold to
FINCO. On portfolios  owned by FINCO,  the Company does not record  amortization
expense.

As a result of the above, the Company's operating income of $8.3 million for the
three months ended  September 30, 1999  compared  favorably to $6.4 for the same
period in 1998.

Earnings before interest expense, taxes,  depreciation and amortization (EBITDA)
for the three  months ended  September  30, 1999 was $25.5  million  compared to
$26.7  million for the same  period in 1998.  The  decrease of $1.2  million was
attributable to the decrease in portfolio  services resulting from the manner in
which revenues from off-balance  sheet collections are recognized and the higher
operating expenses.

Net interest  expense for the three months  ended  September  30, 1999 was $13.0
million  compared  to $13.2  million  for the  comparable  period  in 1998.  The
decrease was due primarily to lower interest rates.

Due to the  factors  stated  above,  the net loss  for the  three  months  ended
September 30, 1999 of $4.7 million  compared to the net loss of $6.8 million for
the three months ended September 30, 1998.





Nine Months Ended September 30, 1999 Compared to Nine Months Ended
September 30, 1998
------------------------------------------------------------------

Revenues  for the nine months  ended  September  30,  1999 were  $380.1  million
compared  to $358.6  million in the same period last year - an increase of 6.0%.
The revenue increase of $21.5 million was due primarily to increased collection,
outsourcing  and portfolio  services  revenues of $14.2 million - an increase of
3.8% over last year, and $7.3 million from the  acquisition  of Union.  Revenues
from collection services were $275.0 million for the nine months ended September
30,  1999  compared  to $265.1  million in the  comparable  period in 1998.  The
increase in collection  services revenues was due to a 1.6% increase in existing
business and $5.7 million from the Union acquisition.  The outsourcing  services
revenue of $43.5 million  compared  favorably to prior year of $33.7 million due
to increased  revenue  from new and existing  business of 24.3% and $1.6 million
from the Union acquisition. Revenues from purchased portfolio services increased
to $61.6 million for the nine months ended  September 30, 1999 compared to $59.8
million  in 1998 - up  2.8%.  The  increased  revenue  was  attributable  to the
servicing fee for the  off-balance  sheet  receivable  collections of portfolios
which  increased  due to the formation of FINCO,  offset by lower  revenues from
on-balance sheet portfolios. Prior to forming FINCO, the Company would record as
revenue  the total  collections  on  purchased  portfolios.  Currently,  for all
purchased  portfolios  which  are sold to and  financed  by FINCO,  the  Company
records as revenue a servicing fee on the total  collections of FINCO  purchased
portfolios.  During the nine  months  ended  September  30,  1999,  the  Company
recorded revenue from FINCO servicing fees of $9.8 million on total  collections
of $25.9 million. When compared to the nine months ended September 30, 1998, the
total  collections  of  both  on  and  off-balance  sheet  purchased  portfolios
increased  from $59.8  million in 1998 to $77.7  million in 1999, an increase of
29.9% or $17.9 million.  The increased  collections  resulted  primarily from an
increase in the total  levels of purchased  portfolios  primarily as a result of
the increased  buying  capacity made available  through FINCO. If all portfolios
purchased by FINCO were accounted for on-balance  sheet,  the Company would have
reported revenues,  including total collections of portfolios, of $396.2 million
as compared to $358.6 million, an increase of 10.0%.

Operating  expenses,  exclusive of amortization and depreciation  charges,  were
$299.6  million for the nine months ended  September 30, 1999 and $276.3 million
for the  comparable  period  in 1998 - an  increase  of 8.4%.  The  increase  in
operating expenses, exclusive of amortization and depreciation charges, resulted
primarily  from  the  Union  acquisition,   higher  collection-related  expenses
associated with the increased  revenues of collection and outsourcing  services,
increased   collection-related   expenses   associated   with  the  increase  in
collections of purchased portfolios,  infrastructure costs as the Company aligns
collection  services by  industry,  and related  increases  in  advertising  and
promotional  expenses and   consulting  expenses of approximately  $2.4 million.
For  the  nine  months  ended September 30, 1999, amortization  and depreciation
charges of  $53.0  compared  to  $56.8 million for the same period last year - a
decrease  of 6.5%.  The lower  amortization  and  depreciation  charges resulted
primarily from lower  on-balance sheet portfolio  amortization  offset partially
by  additional  depreciation  and  amortization of goodwill related to the Union
acquisition and depreciation of current year capital expenditures. On portfolios
owned by FINCO, the Company does not record amortization expense.

As a result  of the  above,  the  Company  generated  operating  income of $27.4
million for the nine months ended  September  30, 1999 compared to $25.6 million
for the comparable period in 1998.

Earnings before interest expense, taxes,  depreciation and amortization (EBITDA)
for the nine months ended September 30, 1999 was $80.5 million compared to $82.3
million for the same period in 1998. The decrease was primarily  attributable to
the higher branding and industry  focused  expenses and the decreased  portfolio
services  revenues  resulting from the manner in which revenues from off-balance
sheet collections are recognized.

Net  interest  expense for the nine months  ended  September  30, 1999 was $38.2
million  compared  to $37.6  million  for the  comparable  period  in 1998.  The
increase was primarily due to the  additional  indebtedness  incurred to finance
the Union acquisition offset partially by lower interest rates.

The  provision  for income  taxes of $0.4  million was provided for state income
taxes as the Company has income tax obligations in various states.

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

Due to the  factors  stated  above,  the net  loss  for the  nine  months  ended
September 30, 1999 of $11.2 million compared  favorably to the net loss of $12.5
million for the nine months ended September 30, 1998.



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

At  September  30,  1999,  the  Company  had cash and cash  equivalents  of $4.8
million.  The Company's credit agreement  provides for a $58.0 million revolving
credit facility, which allows the Company to borrow for working capital, general
corporate  purposes  and  acquisitions,  subject  to certain  conditions.  As of
September  30,  1999,  the  Company  had  outstanding  $39.9  million  under the
revolving credit facility leaving $16.1 million,  after  outstanding  letters of
credit, available under the revolving credit facility.

Since  December  31,  1998,  cash and cash  equivalents  decreased  $4.0 million
primarily due to cash  utilized for the net repayment of debt of $12.6  million,
purchases  of loans and  accounts  receivable  portfolios  of $15.2  million and
capital  expenditures  of $14.2 million offset by cash from  operations of $26.9
million and increased  borrowings  under the revolving  credit facility of $14.4
million.  The Company also held $23.8  million of cash for clients in restricted
trust accounts at September 30, 1999.

For the first nine months in 1999,  the Company  made  capital  expenditures  of
$14.2  million  primarily  for the  replacement  and  upgrading of equipment and
expansion of the Company's information services systems. The Company anticipates
spending approximately $18.0 million for capital expenditures in 1999.

The Company, Madison Dearborn Capital Partners III, L.P. ("MDP"), and certain of
the Company's stockholders, optionholders and warrantholders have entered into a
Stock  Subscription  and  Redemption  Agreement,  dated as of  October  8, 1999,
pursuant  to  which  MDP  will  acquire  a  controlling   interest  in  OSI  for
approximately $790 million and most of the currently  outstanding  capital stock
of OSI  will be  redeemed  (the  "Recapitalization").  The  Recapitalization  is
expected to be completed by December 31, 1999.

The   Recapitalization   will  be  funded  through  an  equity  contribution  of
approximately $211 million from MDP and existing shareholders, $100 million from
issuance of redeemable preferred shares and borrowings under a new senior credit
facility of $475 million to replace the existing senior credit facility.

The Company's  existing $100 million 11% Senior  Subordinated  Notes will remain
outstanding if the requisite consents are obtained from the holders thereof.  On
November  10,  1999,  the  Company  began  soliciting  consents to the waiver of
certain  of  the  Company's  obligations  under  the  Indenture,  including  its
obligation  to  make  a  change  of  control   offer  in  connection   with  the
Recapitalization  and its failure to comply with certain technical  requirements
relating  to  the  qualification  and  operation  of  FINCO  as an  unrestricted
subsidiary under the Indenture as discussed below.

Since the formation of FINCO,  the Company has treated FINCO as an  unrestricted
subsidiary under the Indenture.  However,  it has recently come to the attention
of the Company  that, at the time of formation of FINCO,  the Company  failed to
take certain ministerial actions to satisfy the technical requirements under the
Indenture for the  designation of FINCO as an unrestricted  subsidiary,  despite
the fact that it could have been designated as such at the time.

Management believes that its failure to properly qualify and operate FINCO as an
unrestricted   subsidiary  under  the  Indenture  is  a  technicality  and  that
substantively   FINCO  should  be  treated  as  qualifying  as  an  unrestricted
subsidiary  since its formation.  If FINCO were not to be treated as having been
an unrestricted subsidiary since its formation,  the Company and FINCO would not
be in compliance with certain restrictive  covenants of the Indenture.  In order
to remove any doubt as to the status of FINCO,  the  Company  began the  consent
solicitation  as previously  mentioned.  Based on preliminary  discussions  with
certain holders of its 11% Senior  Subordinated  Notes,  management believes the
consents will be obtained.


Year 2000
---------

As the Year 2000 approaches,  many corporate systems worldwide could malfunction
or  produce   incorrect   results  because  they  cannot  process   date-related
information  properly.  Dates play a key role in dependable  functioning  of the
software applications,  software systems, information technology infrastructure,
and  embedded  technology  (i.e.,  non-technical  assets such as time clocks and
building  services)  the  Company  relies  upon  in  day-to-day  operations  for
innumerable tasks. This includes any tasks requiring  date-dependent  arithmetic
calculations, sorting and sequencing data, and many other functions.

The Company  identified  this  problem as a key focus during 1997 and as part of
any subsequent due-diligence procedures related to acquisitions completed during
1998.  The Company has assessed the impact of Year 2000 issues on the processing
date-related  information  for  all of its  information  systems  infrastructure
(e.g.,  production  systems) and significant  non-technical  assets.  As the new
millennium  approaches,  the Company has developed  and  implemented a Year 2000
program to deal with this  important  issue in an effective  and timely  manner.
This problem has received significant senior management attention and resources.
Management  reviews  have been held on this  topic.  During  1998 and 1999,  the
Company's  Board of Directors  received and will  continue to receive  quarterly
reports at each regular Board meeting  regarding the Company's overall Year 2000
compliance status and readiness.

An  independent  consulting  firm  has  been  retained  to  provide  independent
verification and testing of the production  systems.  Under the direction of the
Company's Senior Vice President and Chief Information  Officer,  the Company has
established a program management structure, a management process and methodology
and proactive  client and vendor  management  strategies to manage the Year 2000
risk.

Because  many  of the  Company's  client  relationships  are  supported  through
computer-system  interfaces,  it is critical that the Company works  proactively
with its clients to achieve Year 2000 compliance.  The Company has established a
proactive  client  management  strategy  focused on enabling the Company to work
together with clients to assure Year 2000 compliance between respective computer
systems.

The implementation of the client management  strategy commenced in 1998. Letters
were sent to significant  clients,  inquiring  about their Year 2000  compliance
plans and status.  The Company has established a follow-up process with each key
client,  taking a proactive,  customer-focused  approach to achieving  Year 2000
compliance with its customers.

The Company has also  communicated  with its  strategic  suppliers and equipment
vendors,  including suppliers of non-technical  assets,  seeking assurances that
they and their  products  will be Year 2000  ready.  The  Company's  goal was to
obtain as much detailed  information as possible  about its strategic  suppliers
and equipment  vendors' Year 2000 plans to identify those companies which appear
to pose any  significant  risk of failure to perform  their  obligations  to the
Company  as a  result  of the Year  2000.  The  Company  has  compiled  detailed
information regarding all of its strategic suppliers and equipment vendors. This
will be an ongoing  process  during the Year 2000 project.  For those  strategic
suppliers and equipment vendors whose response was not satisfactory, the Company
has developed contingency plans to ensure that sufficient  alternative resources
are available to continue with business operations.

The  target  date for  completion  of all  production  systems  and  significant
non-production systems (e.g.,  predictive dialer systems,  phone switches,  wide
area  network  hardware),  including  non-technical  assets,  is November  1999.
Testing  is  substantially  complete  for  all  systems  with  final  completion
anticipated to be no later than November 1999.

Spending for modifications and updates are being expensed as incurred and is not
to have a material  impact on the results of operations or cash flows.  The cost
of the  Company's  Year 2000 project is being  funded from cash flows  generated
from operations. The Company estimates that its total Year 2000 expenses will be
in the  range  of $1.6 to $1.7  million.  To  date,  the  Company  has  expended
approximately  $1.6 million,  primarily for contract  programmers and consulting
costs  associated  with the  evaluation,  assessment and remediation of computer
systems.

The Company is dependent  upon its own internal  computer  technology and relies
upon the timely  performance of its suppliers and customers and their systems. A
substantial  part of the Company's  day-to-day  operations is dependent on power
and  telecommunications  services, for which alternative sources of services may
be limited.  A large-scale Year 2000 failure could impair the Company's  ability
to provide  timely  performance  results  required by the  Company's  customers,
thereby causing potential liability,  lost revenues and additional expenses, the
amounts which have not been estimated.  The Company's Year 2000 project seeks to
identify  and  minimize   this  risk  and  includes   testing  of  its  in-house
applications,  purchased  software  and hardware to ensure that all such systems
will  function  before  and after the Year  2000.  The  Company  is  continually
refining  its  understanding  of the risk the Year 2000  poses to its  strategic
suppliers and customers  based upon  information  obtained  through its surveys.
This refinement will continue through 1999.

The Company's Year 2000 project  includes the  development of contingency  plans
for business critical systems,  as well as for strategic suppliers and customers
to attempt to minimize  disruption to its operations in the event of a Year 2000
failure. The Company is currently in the process of formulating plans to address
a variety of failure scenarios, including failures of its in-house applications,
as  well  as  failures  of  strategic  suppliers  and  customers.   The  Company
anticipates  that it will  complete Year 2000  contingency  planning by November
1999.

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

The following statements in this 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 cost and successful
implementation of the Company's Year 2000 initiatives,  (2) statements regarding
the completion of the  Recapitalization  and obtaining consents to the waiver of
certain  of  the  Company's  obligations  under  the  Indenture,  including  its
obligation  to  make  a  change  of  control   offer  in  connection   with  the
Recapitalization  and its failure to comply with certain technical  requirements
relating to the qualification and operation of FINCO, (3) statements  concerning
the  anticipated  costs  and  outcome  of legal  proceedings  and  environmental
liabilities,   (4)   statements   regarding  the  Company's   expected   capital
expenditures,  (5) any statements  preceded by,  followed by or that include the
word  "believes,"  "expects,"  "anticipates,"  "intends,"  "should,"  "may,"  or
similar  expressions;  and (6) 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  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) the status and  effectiveness  of the Company's  Year 2000
efforts,  (8) legal proceedings,  (9) environmental  investigations and clean up
efforts,  (10)  the  Company's  ability  to  rationalize  operations  of  recent
acquisitions,  and (11) 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,  (12) the failure
of the holders of the Company's 11% Senior  Subordinated Notes to consent to the
waiver of certain  obligations under the Indenture,  and (13) the failure of any
parts to consumate the Recapitalization transactions.

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.




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
agreement,  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.

Since December 31, 1998 (the most recent completed fiscal year), there have been
no material changes in the reported market risks.

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, 1998.


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

             10.1 Amended and Restated Employment Agreement dated  as of June 4,
                  1999 by and between the Company and Timothy G. Beffa.

             10.2 Amended and Restated Employment Agreement dated  as of June 4,
                  1999 by and between the Company and Michael A. DiMarco.

             10.3 Amended and Restated Employment Agreement dated  as of June 4,
                  1999 by and between the Company and C. Bradford McLeod.

             10.4 Form of Non-Qualified Stock Option Award Agreement [E].

             Exhibit 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, 1999.
<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


                                    /s/ Daniel T. Pijut
                                    --------------------------------------------
                                    Daniel T. Pijut
                                    Vice President, Corporate Controller
                                       and Chief Accounting Officer


Date:    November 15, 1999