SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549
                             FORM 10-Q

(Mark One)

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

               For the quarterly period ended September 30, 1998
                                              ------------------

OR

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

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

               Commission File Number     333-16867 
                                          ---------

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

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

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

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

Indicate by checkmark whether the registrant: (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

               Yes  X         No     
                  ----           ----

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock as of the latest practicable date.
                                                            Outstanding at
             Class                                        September 30, 1998
------------------------------------------                ------------------
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, 1998 (unaudited) and December 31, 1997 .............  3


           Condensed Consolidated Statements of Operations for the
           three and nine months ended September 30, 1998 
           and 1997 (unaudited) .............................................  4


           Condensed Consolidated Statements of Cash Flows for the
           nine months ended September 30, 1998 and 1997 (unaudited) ........  5


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


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



Part II.  Other Information  ................................................ 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,
                                                                                  1998             1997
                                                                                Unaudited        Audited
                                                                              ------------     ------------
<S>                                                                            <C>              <C>      
ASSETS

CURRENT ASSETS:
    Cash and cash equivalents                                                   $  9,356         $  3,217
    Cash and cash equivalents held for clients                                    24,392           20,762
    Current portion of purchased loans and accounts receivable portfolios         41,063           42,915
    Accounts receivable - trade, less allowance for doubtful                      40,026           27,192
      receivables of $1,276 and $538
    Other current assets                                                           7,573            2,119
                                                                                --------         --------
      Total current assets                                                       122,410           96,205

PURCHASED LOANS AND ACCOUNTS RECEIVABLE PORTFOLIOS                                24,769           19,537

PROPERTY AND EQUIPMENT, net                                                       45,323           32,563

INTANGIBLE ASSETS, net                                                           422,657          219,795

DEFERRED FINANCING COSTS, net                                                     13,452           12,517

OTHER ASSETS                                                                         370            1,073
                                                                                --------         --------
TOTAL                                                                           $628,981         $381,690
                                                                                ========         ========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
    Accounts payable - trade                                                    $  8,326         $  6,977
    Collections due to clients                                                    24,392           20,762
    Accrued compensation                                                          15,610            8,332
    Other current liabilities                                                     46,957           26,131
    Current portion of long-term debt                                             16,661           15,445
                                                                                --------         --------
      Total current liabilities                                                  111,946           77,647

LONG-TERM DEBT                                                                   512,068          309,521

OTHER LONG-TERM LIABILITIES                                                       23,160               --

STOCKHOLDERS' EQUITY (DEFICIT):
    8% nonvoting cumulative redeemable exchangeable preferred stock;              12,167           11,699
      authorized 1,000,000 shares,973,322.32 and 935,886.85 shares, 
      respectively, issued and outstanding, at liquidation value of  
      $12.50 per share
    Voting common stock; $.01 par value; authorized 7,500,000 shares,                 35               35
      3,477,126.01 shares issued and outstanding
    Class A convertible nonvoting common stock; $.01 par value;                        4                4
      authorized 7,500,000 shares, 391,740.58 shares issued and outstanding 
    Class B convertible nonvoting common stock; $.01 par value;                        4                4
      authorized 500,000 shares, 400,000 shares issued and outstanding
    Class C convertible nonvoting common stock; $.01 par value;                       10               10
      authorized 1,500,000 shares, 1,040,000 shares issued and outstanding
    Paid-in capital                                                               66,958           66,958
    Retained deficit                                                             (97,371)         (84,188)
                                                                                --------         --------
      Total stockholders' equity (deficit)                                       (18,193)          (5,478)
                                                                                --------         --------
TOTAL                                                                           $628,981         $381,690
                                                                                ========         ========


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

</TABLE>

<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
                                                       --------------------       ---------------------
                                                         1998         1997          1998         1997

<S>                                                    <C>          <C>           <C>          <C>     
REVENUES                                               $119,903     $67,537       $358,634     $197,663

EXPENSES:
    Salaries and benefits                                58,050      32,218        171,203       97,018
    Service fees and other operating and                 35,130      16,314        105,100       49,882
      administrative expenses
    Amortization of loans and accounts                   12,840      13,138         35,198       31,174
      receivable purchased
    Amortization of goodwill and other intangibles        4,045       5,293         11,588       21,269
    Depreciation expense                                  3,486       2,558          9,963        7,615
                                                        -------     -------      ---------    ---------
      Total expenses                                    113,551      69,521        333,052      206,958
                                                        -------     -------      ---------    ---------

OPERATING INCOME (LOSS)                                   6,352      (1,984)        25,582       (9,295)

INTEREST EXPENSE - Net                                   13,164       7,153         37,554       20,950
                                                        -------     -------      ---------    ---------

LOSS BEFORE INCOME TAXES AND MINORITY INTEREST           (6,812)     (9,137)       (11,972)     (30,245)

INCOME TAX BENEFIT                                           --      (2,797)            --       (9,626)

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

NET LOSS                                                 (6,812)     (6,340)       (12,544)     (20,619)

PREFERRED STOCK DIVIDEND REQUIREMENTS                       162         266            639          686
                                                        -------     -------      ---------    --------- 

NET LOSS TO COMMON STOCKHOLDERS                         $(6,974)    $(6,606)     $ (13,183)   $ (21,305)
                                                        =======     =======      =========    ========= 

                         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,
                                                                                --------------------------
                                                                                  1998             1997
<S>                                                                             <C>              <C>      
OPERATING ACTIVITIES:
    Net loss                                                                    $(12,544)        $(20,619)
    Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:
    Depreciation and amortization                                                 23,654           28,884
    Amortization of loans and accounts receivable purchased                       35,198           31,174
    Deferred taxes                                                                    --           (9,626)
    Minority interest                                                                572               --
    Change in assets and liabilities:
      Other current assets                                                         5,256           (2,621)
      Accounts payable and other current liabilities                             (10,122)         (10,773)
                                                                                --------         --------
         Net cash provided by operating activities                                42,014           16,419
                                                                                --------         --------

INVESTING ACTIVITIES:
    Payments for acquisitions, net of cash acquired                             (167,305)          (1,200)
    Purchase of loans and accounts receivable portfolios                         (38,030)         (34,955)
    Acquisition of property and equipment                                        (10,794)          (5,729)
                                                                                --------         --------
         Net cash used in investing activities                                  (216,129)         (41,884)
                                                                                --------         --------

FINANCING ACTIVITIES:
    Proceeds from term loans                                                     225,469               --
    Borrowings under revolving credit agreement                                  168,050           44,300
    Repayments under revolving credit agreement                                 (177,900)         (16,900)
    Repayments of debt                                                           (32,327)          (7,225)
    Deferred financing fees                                                       (3,038)            (324)
                                                                                --------         --------
         Net cash provided by financing activities                               180,254           19,851
                                                                                --------         --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                               6,139           (5,614)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                     3,217           14,497
                                                                                --------         --------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                        $  9,356         $  8,883
                                                                                ========         ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid during period for interest                                        $ 28,407         $ 12,146
                                                                                ========         ========

SUPPLEMENTAL  DISCLOSURE OF NONCASH INVESTING AND FINANCING  ACTIVITIES - During
the nine months ended  September 30, 1998 and 1997,  the Company paid  preferred
stock  dividends  of $468  and  $883,  respectively,  through  the  issuance  of
37,435.47 shares and 70,606.84 shares of preferred stock, respectively.


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


</TABLE>

<PAGE>


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

NOTE 1.  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  Operating  results for the three and nine months ended September
30, 1998 are not necessarily  indicative of the results that may be expected for
the year ended December 31, 1998. For purposes of  comparability,  certain prior
year and prior  quarter  amounts  have been  reclassified  to conform to current
quarter and year to date presentation.  These Condensed  Consolidated  Financial
Statements  should  be read  in  conjunction  with  the  Consolidated  Financial
Statements  and notes thereto  contained in the Company's Form 10-K for the year
ended December 31, 1997.


NOTE 2.  ACQUISITIONS

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 when Union merged with a wholly-owned  subsidiary of
the  Company.  The  aggregate  purchase  price  of  the  Union  acquisition  was
approximately  $230,000  including  transaction fees, assumed  liabilities,  and
certain adjustments to conform to the Company's accounting policies. The Company
financed the acquisition primarily with funds provided by the Second Amended and
Restated Credit  Agreement (as defined  herein).  Union,  through certain of its
subsidiaries,  furnishes  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.  Accordingly,  the purchase price has been  preliminarily  allocated
based upon the estimated fair value of the net assets  acquired.  This treatment
resulted in  approximately  $214,025 of goodwill that will be 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 gives effect
to the Union  acquisition  as well as the North  Shore  Agency  and  Accelerated
Bureau of Collections  acquisitions that occurred in the fourth quarter of 1997,
as if  such  acquisitions  had  occurred  as of the  beginning  of  each  period
presented.  The pro forma  adjustments are based upon available  information and
certain assumptions that management  believes are reasonable.  The unaudited pro
forma  consolidated  financial  data  does not  purport  to  represent  what the
Company's  financial  position  or  results  of  operations  would  have been if
consummation of the  acquisitions  of Union,  North Shore Agency and Accelerated
Bureau of Collections had occurred on the date indicated or what may be achieved
in the future.  Except for the elimination of costs  associated with duplicative
administrative  functions and facilities based upon actions actually taken as of
the close of the transactions,  anticipated cost savings have not been reflected
in this presentation. The unaudited pro forma consolidated financial data should
be read in conjunction with the historical consolidated financial statements and
accompanying  notes for the Company,  Union,  North Shore Agency and Accelerated
Bureau of Collections.

                           For the three months         For the nine months
                            Ended September 30,         Ended September 30,
                          ---------------------         -------------------
                            1998        1997              1998        1997
                            ----        ----              ----        ----

         Revenues         $119,903    $115,663          $365,988   $343,984
                          ========    ========          ========   ========

         Net loss          $(6,812)    $(7,570)         $(13,665)  $(23,490)
                           =======     =======          ========   ======== 


NOTE 3.  DEBT

On January 26,  1998,  the Company  entered  into a Second  Amended and Restated
Credit Agreement  ("Agreement")  with a group of banks in part to fund the Union
acquisition. This Agreement amended the Company's existing credit agreement. The
Agreement  consists of a $412,422  term loan  facility  and a $58,000  revolving
credit facility.

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

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

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


NOTE 4.  LITIGATION

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,
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.  Each of these matters is
subject to various uncertainties,  and it is possible that some of these matters
will be decided  unfavorably  against the Company.  The Company has established,
with input from  environmental and legal experts,  accruals for matters that are
in its view probable and reasonably  estimable.  Based on information  presently
available,  management believes that existing accruals are sufficient to satisfy
any known environmental liabilities.


NOTE 5. NEW ACCOUNTING PRONOUNCEMENT

In June 1998, the Financial  Accounting  Standards Board issued the Statement of
Financial  Accounting Standard No. 133,  "Accounting for Derivative  Instruments
and Hedging  Activities,"  which is effective for fiscal periods beginning after
June 15, 1999. The adoption of this statement is not expected to have a material
effect on the financial statements.


<PAGE>


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

Results of Operations

Three Months  Ended  September  30, 1998  Compared to Three Months 
Ended September 30, 1997

Revenues  for the three  months  ended  September  30, 1998 were $119.9  million
compared with $67.5 million in the same period last year - an increase of 77.5%.
The revenue  increase of $52.4 million was primarily due to the  acquisitions of
Union, North Shore Agency and Accelerated  Bureau of Collections.  Revenues from
fee services  were $84.7  million for the three months ended  September 30, 1998
compared to $39.0 million in the comparable  period in 1997. The increase in fee
revenues of 116.9% was  primarily due to the three  acquisitions.  Revenues from
purchased  portfolios  increased  1.3% to $19.3  million for the  quarter  ended
September  30,  1998  compared  to  $18.9  million  in 1997 due  primarily  from
strategic sales of portfolios. The outsourcing revenue of $15.9 million compared
favorably to prior year of $9.6 million due primarily to the Union acquisition.

Operating  expenses for the three months  ended  September  30, 1998 were $113.6
million  compared  to  $69.5  million  for the  comparable  period  in 1997 - an
increase of $44.1 million.  Operating  expenses,  exclusive of amortization  and
depreciation  charges,  were $93.2 million for the three months ended  September
30, 1998 and $48.5 million for the  comparable  period in 1997.  The increase in
operating expenses, exclusive of amortization and depreciation charges, resulted
from the three acquisitions. Of the $113.6 million in operating expenses for the
three months  ended  September  30,  1998,  $20.4  million was  attributable  to
amortization  and  depreciation  charges  compared to $21.0 million for the same
period last year. The lower amortization and depreciation charges were due to no
account  placement  inventory  amortization in 1998 ($3.5 million in 1997) since
account  placement  inventory was fully amortized as of December 31, 1997 offset
partially by  depreciation  and  amortization  of goodwill  related to the three
acquisitions.

As a result of the above, the Company generated operating income of $6.4 million
for the three months ended  September 30, 1998 compared to an operating  loss of
$2.0 million for the comparable period in 1997.

Earnings before interest expense, taxes,  depreciation and amortization (EBITDA)
for the quarter ended  September  30, 1998 was $26.7  million  compared to $19.1
million  for  the  same  period  in  1997.  The  increase  of $7.6  million  was
attributable to the three acquisitions.

Net interest  expense for the three months  ended  September  30, 1998 was $13.2
million compared to $7.2 million for the comparable period in 1997. The increase
was  primarily  due to  additional  indebtedness  incurred to finance the Union,
North Shore Agency and Accelerated Bureau of Collections acquisitions.

Consistent with management's  assessment made in the fourth quarter of 1997, the
potential tax benefits  generated by additional net operating loss carryovers or
the future  reversal of the net deductible  temporary  differences for the three
months ended September 30, 1998 were fully offset by valuation allowance of $2.7
million.

Due to the factors  stated  above and the fact that the Company  recorded a $2.8
million tax benefit in the third  quarter of 1997,  the net loss for the quarter
ended  September  30, 1998 was $6.8  million  compared  to $6.3  million for the
comparable period in 1997.


Nine  Months  Ended  September  30,  1998  Compared to Nine Months 
Ended September 30, 1997

Revenues  for the nine months  ended  September  30,  1998 were  $358.6  million
compared  with  $197.7  million in the same  period  last year - an  increase of
81.4%. The revenue increase of $160.9 million was due primarily to increased fee
services and portfolio revenues of $11.6 million - an increase of 5.9% over last
year, and $152.3 million from the acquisitions of Union,  North Shore Agency and
Accelerated  Bureau of Collections  offset by lower outsourcing  revenue of $3.0
million.  Revenues  from fee  services  were $255.2  million for the nine months
ended September 30, 1998 compared to $116.2 million in the comparable  period in
1997.  The  increase  in fee  revenues  was due to a 4.0%  increase  in existing
business and $134.3 million from the three acquisitions. Revenues from purchased
portfolios  increased to $59.1  million for the nine months ended  September 30,
1998  compared  to $52.1  million  in 1997 - up  13.3%.  The  increased  revenue
resulted primarily from strategic sales of portfolios.  The outsourcing  revenue
of $44.3 million compared favorably to prior year of $29.4 million due primarily
to the Union acquisition.

Operating  expenses  for the nine months  ended  September  30, 1998 were $333.1
million compared to $207.0 million for the comparable period in 1997.  Operating
expenses,  exclusive  of  amortization  and  depreciation  charges,  were $276.3
million for the nine months ended  September 30, 1998 and $146.9 million for the
comparable  period in 1997 - an increase  of 88.1%.  The  increase in  operating
expenses, exclusive of amortization and depreciation charges, resulted primarily
from  the  three  acquisitions  as well as  higher  collection-related  expenses
associated  with the  increased  revenues.  Of the $333.1  million in  operating
expenses  for the nine  months  ended  September  30,  1998,  $56.8  million was
attributable to amortization and depreciation  charges compared to $60.1 million
for the same period last year. The lower  amortization and depreciation  charges
resulted from no account placement inventory amortization in 1998 ($15.6 million
in 1997) since account  placement  inventory was fully  amortized as of December
31, 1997,  offset  partially by  additional  depreciation  and  amortization  of
goodwill related to the three acquisitions and increased portfolio  amortization
resulting from increased portfolio revenue.

As a result  of the  above,  the  Company  generated  operating  income of $25.6
million for the nine months ended  September  30, 1998  compared to an operating
loss of $9.3 million for the comparable period in 1997.

Earnings before interest expense, taxes,  depreciation and amortization (EBITDA)
for the nine months ended September 30, 1998 was $82.3 million compared to $50.8
million for the same period in 1997. The increase of $31.5 million  consisted of
$25.9 million as a result of the three  acquisitions and $5.6 million  primarily
from the increased revenue from operations unrelated to the acquisitions of $8.6
million.

Net  interest  expense for the nine months  ended  September  30, 1998 was $37.6
million  compared  to $21.0  million  for the  comparable  period  in 1997.  The
increase was primarily due to  additional  indebtedness  incurred to finance the
Union, North Shore Agency and Accelerated Bureau of Collections acquisitions.

Consistent with management's  assessment made in the fourth quarter of 1997, the
potential tax benefits  generated by additional net operating loss carryovers or
the future  reversal of the net deductible  temporary  differences  for the nine
months ended September 30, 1998 were fully offset by valuation allowance of $4.8
million.

Minority  interest in earnings 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,  1998  was  $12.5  million  compared  to  $20.6  million  for the
comparable period in 1997 - an improvement of $8.1 million.

Financial Condition, Liquidity and Capital Resources

At  September  30,  1998,  the  Company  had cash and cash  equivalents  of $9.4
million. In addition, the Company has a $58.0 million revolving credit facility,
which  allows the  Company  to borrow for  working  capital,  general  corporate
purposes and acquisitions,  subject to certain  conditions.  As of September 30,
1998,  the Company had  outstanding  $22.0 million  under the  revolving  credit
facility leaving $34.4 million,  after outstanding letters of credit,  available
under the revolving credit facility.

Since  December  31,  1997,  cash and cash  equivalents  increased  $6.1 million
primarily due to cash provided by operations  and financing  activities of $42.0
million and $180.3 million, respectively,  offset primarily by cash utilized for
the  Union  acquisition  of $164.7  million,  purchases  of loans  and  accounts
receivable  portfolios  of  $38.0  million  and  capital  expenditures  of $10.8
million.  The Company also held $24.4  million of cash for clients in restricted
trust accounts at September 30, 1998.

For the first nine months in 1998,  the Company  made  capital  expenditures  of
$10.8  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 1998.

On October 29, 1998, the Company executed a warehouse financing arrangement that
provides  the  Company  with up to $100  million of  off-balance  sheet  funding
capacity for the purchase of account  receivable  portfolios  over its five year
term.  Proceeds from this arrangement,  funded by an insurance company sponsored
commercial paper conduit, will allow the Company to finance substantially all of
its portfolio purchasing  activities without additional borrowings from its bank
credit facility.  Pursuant to this financing  arrangement,  the Company's Second
Amended and Restated Credit  Agreement was amended to limit borrowing  available
for future account portfolio  purchases and to permit an initial investment in a
new wholly-owned, non-consolidated bankruptcy-remote subsidiary.

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
of 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  has  requested  and  will  continue  to  receive
quarterly  presentations  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 has  commenced in 1998.
Letters have been sent to significant  clients,  inquiring about their Year 2000
compliance  plans and status.  The  Company is working to  establish 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 is 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  expects to have  compiled  detailed
information  regarding all of its strategic  suppliers and equipment  vendors by
December 1998. This will be an ongoing process during the Year 2000 project. For
those strategic  suppliers and equipment vendors that do not respond as to their
status or their  response is not  satisfactory,  the Company  intends to develop
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 March, 1999, with
testing to begin during the first quarter of 1999 with  completion no later than
mid-1999.

Spending for modifications and updates are being expensed as incurred and is not
expected 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 $1.2 to $1.5 million.  To date, the Company has
expended  approximately  $0.8 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 the rest of 1998 and into 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 will be 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 mid-1999.


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 concerning
the  anticipated  costs  and  outcome  of legal  proceedings  and  environmental
liabilities,  (3) any  statements  preceded by,  followed by or that include the
word  "believes,"  "expects,"  "anticipates,"  "intends,"  "should,"  "may,"  or
similar  expressions;  and (4) 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.

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




<PAGE>


PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is subject to various  investigations,  claims and legal proceedings
covering a wide range of matters that arise in the normal course of business and
are routine to the nature of the  Company's  business.  Other  information  with
respect to legal proceedings appears in the Company's Annual Report on Form 10-K
for the year ended  December 31, 1997,  and the Company's  Quarterly  Reports on
Form 10-Q for the quarters ended March 31, 1998 and June 30, 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

              Exhibit 10.1 First  Amendment  to the Second  Amended and Restated
                 Credit Agreement, dated as of March 31, 1998
              Exhibit 10.2 Second  Amendment to the Second  Amended and Restated
                 Credit Agreement, dated as of August 5, 1998
              Exhibit 10.3 Third  Amendment  to the Second  Amended and Restated
                 Credit Agreement, dated as of September 23, 1998
              Exhibit  10.4  Employment  Agreement  dated as of March 1,
                 1997 between Outsourcing Solutions Inc. and Michael Meyer
              Exhibit 27 Financial Date 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, 1998.



<PAGE>

                                SIGNATURES

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



                                OUTSOURCING SOLUTIONS INC.
                                (Registrant)



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



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



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


Date:    November 13, 1998