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         June 30, 2002
                                --------------------------------

OR

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

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

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

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

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

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

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

Indicate by checkmark whether the registrant: (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.   Yes   X    No
                                         -----     -----

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

                                                             Outstanding at
        Class                                                June 30, 2002
-----------------------                                      --------------
Senior common stock                                             489,795.93
Voting common stock                                           6,129,295.63
Non-voting common stock                                         480,321.30
                                                              ------------
                                                              7,099,412.86
                                                              ============


<PAGE>

PAGE 2


                           OUTSOURCING SOLUTIONS INC.
                                AND SUBSIDIARIES



                                TABLE OF CONTENTS


Part I.    Financial Information                                            Page
                                                                            ----
  Item 1.  Financial Statements (unaudited)

           Condensed Consolidated Balance Sheets
           June 30, 2002 and December 31, 2001..............................  3


           Condensed Consolidated Statements of Operations for
           the three and six months ended June 30, 2002 and 2001............  4


           Condensed Consolidated Statements of Cash Flows for
           the six months ended June 30, 2002 and 2001......................  5


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


  Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations........................................ 12


  Item 3.  Quantitative and Qualitative Disclosures About Market Risk....... 18


Part II.   Other Information................................................ 19
<PAGE>

PAGE 3

OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

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

ASSETS                                                   June 30,   December 31,
                                                           2002         2001
                                                       -----------  ------------

Cash and cash equivalents                                $10,587      $ 9,535

Cash and cash equivalents held for clients                24,986       25,920

Accounts receivable - trade, less allowance
for doubtful receivables of  $1,034 and $1,080            72,402       60,100

Purchased loans and accounts receivable portfolios        17,049       17,477

Property and equipment, net                               46,188       46,952

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

Deferred financing costs, less accumulated
amortization of $11,493 and $8,844                        19,915       18,665

Other assets                                              34,996       39,690
                                                        --------     --------

             TOTAL                                      $648,187     $640,210
                                                        ========     ========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Accounts payable - trade                                 $19,257      $16,192

Collections due to clients                                24,986       25,920

Accrued salaries, wages and benefits                      16,161       13,325

Debt                                                     530,877      539,020

Other liabilities                                         74,992       76,346

Commitments and contingencies (Notes 2 and 9)

Mandatorily redeemable preferred stock; redemption
amount of $157,528 and $140,560                          141,773      123,482

Stockholders' deficit:
  Senior common stock; $.01 par value; authorized
    900,000 shares, 489,795.93 issued and
    outstanding                                                5            5
  Voting common stock; $.01 par value; authorized
    20,000,000 shares, 9,207,544.70 and
    9,166,728.37 shares issued                                92           92
  Non-voting common stock; $.01 par value;
    authorized 2,000,000 shares, 480,321.30 issued
    and outstanding                                            5            5
  Paid-in capital                                        225,277      223,277
  Accumulated deficit                                   (241,832)    (231,754)
  Accumulated other comprehensive loss                    (6,530)      (8,883)
  Notes receivable from management for shares sold        (2,019)      (1,960)
  Voting common stock in treasury, at cost;
    3,078,249.07 shares                                 (134,857)    (134,857)
                                                        --------     --------
        Total stockholders' deficit                     (159,859)    (154,075)
                                                        --------     --------
               TOTAL                                    $648,187     $640,210
                                                        ========     ========




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


<PAGE>

PAGE 4

OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

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

                                       Three Months Ended      Six Months Ended
                                            June 30,               June 30,
                                      --------------------  --------------------
                                        2002      2001        2002      2001

REVENUES                              $156,426  $157,433    $317,524  $309,019

EXPENSES:
  Salaries and benefits                 75,356    75,859     153,479   150,183
  Service fees and other operating
    and administrative expenses         53,719    52,722     107,781   100,341
  Amortization of purchased loans and
    accounts receivable portfolios       8,956     5,012      17,065    11,991
  Amortization of goodwill                   -     4,161           -     8,213
  Depreciation expense                   3,987     3,605       7,879     7,307
  Conversion, realignment and
    relocation expenses                      -         -       2,500         -
                                      --------  --------    --------  --------
      Total expenses                   142,018   141,359     288,704   278,035
                                      --------  --------    --------  --------

OPERATING INCOME                        14,408    16,074      28,820    30,984

INTEREST EXPENSE - Net                  15,410    13,819      27,232    30,080
                                      --------  --------    --------  --------

INCOME (LOSS) BEFORE INCOME TAXES       (1,002)    2,255       1,588       904

PROVISION FOR INCOME TAXES                 200       175         375       350
                                      --------  --------    --------  --------

NET INCOME (LOSS)                       (1,202)    2,080       1,213       554

PREFERRED STOCK DIVIDEND
  REQUIREMENTS AND ACCRETION OF
  SENIOR PREFERRED STOCK                 5,887     4,928      11,291     9,710
                                      --------  --------    --------  --------

NET LOSS TO COMMON STOCKHOLDERS        $(7,089)  $(2,848)   $(10,078)  $(9,156)
                                      ========  ========    ========  ========




















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

<PAGE>

PAGE 5

OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

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

                                                            Six Months Ended
                                                                 June 30,
                                                         -----------------------
                                                            2002         2001
OPERATING ACTIVITIES AND PORTFOLIO PURCHASING:
  Net income                                              $  1,213     $    554
  Adjustments to reconcile net income to
    net cash from operating activities and
    portfolio purchasing:
    Depreciation and amortization                           12,251       17,727
    Amortization of purchased loans and accounts
      receivable portfolios                                 17,065       11,991
    Non-cash compensation expense related to
      variable stock options                                     -          741
    Change in assets and liabilities excluding
      the effects of acquisitions:
      Purchases of loans and accounts
        receivable portfolios                              (16,637)      (6,691)
      Accounts receivable and other assets                  (8,031)     (11,572)
      Accounts payable, accrued expenses
        and other liabilities                                4,765       (1,943)
                                                          --------     --------
        Net cash from operating activities and
          portfolio purchasing                              10,626       10,807
                                                          --------     --------

INVESTING ACTIVITIES:
  Acquisition of property and equipment                     (4,439)      (5,657)
  Payment for acquisitions, net of cash acquired                 -      (21,254)
  Purchases of loans and accounts receivable
    portfolios for resale to FINCO                               -      (43,629)
  Sales of loans and accounts receivable
    portfolios to FINCO                                          -       43,629
  Other                                                         15       (3,025)
                                                          --------     --------
        Net cash used by investing activities               (4,424)     (29,936)
                                                          --------     --------

FINANCING ACTIVITIES:
  Borrowings under revolving credit agreement               70,300      160,800
  Repayments under revolving credit agreement              (66,300)    (160,400)
  Repayments of debt                                       (12,376)      (5,126)
  Proceeds from issuance of preferred and
    common stock                                             7,000       22,004
  Deferred financing fees                                   (3,774)        (162)
                                                          --------     --------
           Net cash from financing activities               (5,150)      17,116
                                                          --------     --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         1,052       (2,013)

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

CASH AND CASH EQUIVALENTS, END OF PERIOD                  $ 10,587     $  8,260
                                                          ========     ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during period for interest                    $ 22,693     $ 28,647
                                                          ========     ========
  Net cash paid during period for taxes                   $    355     $    321
                                                          ========     ========

SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION:
  Accrued dividends on mandatorily redeemable
    preferred stock                                       $  9,968     $  8,430
                                                          ========     ========
  Accretion of mandatorily redeemable
    preferred stock                                       $  1,323     $  1,280
                                                          ========     ========
  Capital lease obligations incurred for the
    purchase of equipment                                 $    323     $      -
                                                          ========     ========
  Issuance of voting common stock for the
    purchase of equipment                                 $  2,000     $      -
                                                          ========     ========


               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 for share and per share amounts)

NOTE 1.  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States for interim  financial  information  and with the  instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information  and footnotes  required by accounting  principles  generally
accepted in the United States for complete financial statements.  In the opinion
of management, all adjustments (consisting of normal recurring items) considered
necessary for a fair presentation have been included.  Operating results for the
three and six months ended June 30, 2002 are not  necessarily  indicative of the
results  that may be  expected  for the year ending  December  31,  2002.  These
Condensed  Consolidated  Financial Statements should be read in conjunction with
the  Consolidated  Financial  Statements  and  notes  thereto  contained  in the
Company's Form 10-K for the year ended December 31, 2001.


NOTE 2.  LITIGATION

From time to time,  the Company and certain of its  subsidiaries  are subject to
various  investigations,  claims and legal proceedings  covering a wide range of
matters  that  arise in the normal  course of  business  and are  routine to the
nature of the Company's businesses.  In addition, as a result of the acquisition
in a prior year of The Union  Corporation,  certain  subsidiaries of the Company
are a party to several  on-going  environmental  remediation  investigations  by
federal and state  governmental  agencies and  clean-ups  and,  along with other
companies,  have been named a "potentially  responsible party" for certain waste
disposal  sites.  While the  results  of  litigation  cannot be  predicted  with
certainty,  the Company has provided  for the  estimated  uninsured  amounts and
costs to resolve the pending suits and management,  in  consultation  with legal
counsel,  believes  that  reserves  established  for the ultimate  resolution of
pending matters are adequate at June 30, 2002.


NOTE 3.  PURCHASED LOANS AND ACCOUNTS RECEIVABLE PORTFOLIOS FINANCING

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

The following  summarizes the transactions between the Company and FINCO for the
periods ended June 30:

                                      Three Months Ended      Six Months Ended
                                           June 30,               June 30,
                                      ------------------     ------------------
                                       2002       2001         2002       2001
Sales of purchased loans and
  accounts receivable portfolios
  by the Company to FINCO             $     -    $27,007     $     -    $43,629

Servicing fees paid by FINCO
  to the Company                      $ 7,569    $ 9,170     $16,276    $20,169

Sales of purchased loans and accounts receivable  portfolios  ("Receivables") by
the  Company to FINCO,  when such  Receivables  are  financed  by the  Warehouse
Facility,  were in the same amount and occurred  shortly  after such  portfolios
were acquired by the Company from the various  unrelated  sellers.  As such, the
Company's  Statements of Operations do not include  revenues or expenses related
to these  loans and  accounts  receivable  portfolios.  In  conjunction  with an
agreement to provide certain  administrative  and collection  services to FINCO,
the  Company  can  achieve a bonus  fee if  amounts  in  excess of the  original
purchase price of a portfolio are recovered.  Payment of any bonus is subject to
certain  collateral  and  collection  sharing  requirements  as  outlined in the
agreement.  Receivables  from FINCO,  which are  included in other assets in the
accompanying condensed consolidated balance sheet, were $12,468 at June 30, 2002
and $17,014 at December 31, 2001.

At June 30, 2002 and December 31, 2001,  FINCO had  unamortized  Receivables  of
$45,212 and $75,921, respectively. At June 30, 2002 and December 31, 2001, FINCO
had  outstanding  borrowings  of $40,761 and  $66,391,  respectively,  under its
Warehouse Facility. See Note 11.

FINCO's  summarized results from operations for the periods ended June 30 are as
follows:

                                   Three Months Ended         Six Months Ended
                                        June 30,                  June 30,
                                   ------------------        ------------------
                                     2002       2001           2002       2001

Revenues                           $22,062    $32,220        $50,797    $59,190
Income from operations               2,250      3,009          4,190      4,631
Net income                           1,874      1,977          3,343      2,437


NOTE 4.  DERIVATIVES AND HEDGING ACTIVITIES

The Company is subject to the risk of  fluctuating  interest rates in the normal
course of business.  The Company's interest rate hedges are primarily classified
as cash flow hedges.  For a cash flow hedge of an anticipated  transaction,  the
ineffective portion of the change in fair value of the derivative is recorded in
earnings as incurred,  whereas the effective  portion is deferred in accumulated
other comprehensive  income (loss) on the balance sheet until the transaction is
realized,  at which time any  deferred  hedging  gains or losses are recorded in
earnings.  During  the  quarters  ended  June 30,  2002 and  2001,  the  Company
recorded,  as part of  interest  expense,  a loss of $2,220  and a gain of $518,
respectively,  due to the impact of the interest rate hedges. For the six months
ended June 30, 2002 and 2001, the net impact on interest expense was an increase
of $1,848 and zero,  respectively,  as a result of the interest rate hedges.  At
June 30, 2002 and December 31, 2001,  the related  liability  (included in other
liabilities) is $11,429 and $11,934, respectively. At June 30, 2002 and December
31, 2001, the amount included in accumulated other  comprehensive  income (loss)
is $6,530 and $8,883, respectively.



NOTE 5.  COMPREHENSIVE INCOME (LOSS)

The components of total  comprehensive  income (loss) for the periods ended June
30 are as follows:
                                      Three Months Ended      Six Months Ended
                                            June 30,               June 30,
                                      -------------------   -------------------
                                        2002       2001         2002       2001

Net income (loss)                     $(1,202)   $ 2,080      $ 1,213   $   554
Other comprehensive income item:
  Net income (loss) on cash flow
  hedging instruments                     105        (83)       2,353    (6,621)
                                      -------    -------      -------   -------
Total comprehensive income (loss)     $(1,097)   $ 1,997      $ 3,566   $(6,067)
                                      =======    =======      =======   =======


NOTE 6.  CONVERSION, REALIGNMENT AND RELOCATION EXPENSES

For the six  months  ended  June  30,  2002,  the  Company  incurred  $2,500  of
nonrecurring consolidation,  realignment and relocation expenses. These expenses
include  costs  resulting  from  closure  of  certain  call  centers,  severance
associated with these office closures,  severance as a result of cost reductions
and certain other one-time costs including certain investigative costs resulting
from the inaccurate financial reporting of certain transactions during and prior
to 2001 at one of the  Company's  subsidiaries,  North Shore  Agency,  Inc.  See
further  discussion  in the  Company's  Annual  Report on Form 10-K for the year
ended December 31, 2001.  Accrued costs at June 30, 2002 were $930, all of which
should be substantially settled during 2002.


NOTE 7.  GOODWILL

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

As required by SFAS No. 142, the results  prior to 2002 were not restated in the
condensed  consolidated  statements of operations.  A reconciliation between net
income  (loss)  reported by the Company and the net income (loss) as adjusted to
reflect the impact of SFAS No. 142 for the periods ended June 30 is as follows:

                                     Three Months Ended       Six Months Ended
                                          June 30,                June 30,
                                     --------------------    -------------------
                                        2002       2001         2002      2001

Net income (loss), as reported        $(1,202)   $ 2,080      $ 1,213   $   554
Goodwill amortization                       -      4,161            -     8,213
                                      -------    -------      -------   -------
Adjusted net income (loss)            $(1,202)   $ 6,241      $ 1,213   $ 8,767
                                      =======    =======      =======   =======

The  provisions of SFAS No. 142 also require the completion of the first step of
the transitional goodwill impairment by June 30, 2002. The Company completed the
transitional  impairment  test of  goodwill  and  determined  that  there was no
goodwill impairment.



NOTE 8.  SEGMENT INFORMATION

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

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

The following  table presents  certain data by business  segment for the periods
ended June 30:

                                     Three Months Ended       Six Months Ended
                                          June 30,                 June 30,
                                    ---------------------   --------------------
                                      2002        2001        2002       2001

Revenues
--------
Outsourcing services                $ 87,189    $ 88,339    $177,554   $168,842
Portfolio purchasing services         23,783      23,185      49,215     46,587
Recovery services                     50,247      51,397     101,623    104,299
Eliminations                          (4,793)     (5,488)    (10,868)   (10,709)
                                    --------    --------    --------   --------
Total revenues                      $156,426    $157,433    $317,524   $309,019
                                    ========    ========    ========   ========

Adjusted Operating Earnings
---------------------------
Outsourcing services                $ 12,443    $ 14,728    $ 25,287   $ 28,147
Portfolio purchasing services            964       5,993       3,183      9,870
Recovery services                     12,621      11,616      26,441     24,801
                                    --------    --------    --------   --------
Total adjusted operating earnings   $ 26,028    $ 32,337    $ 54,911   $ 62,818
                                    ========    ========    ========   ========


NOTE 9.  COMMITMENTS AND CONTINGENCIES

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

A subsidiary  of the Company has several  portfolio  flow  purchase  agreements,
whereby the subsidiary has a monthly commitment to purchase  nonperforming loans
meeting certain criteria for an agreed upon price subject to due diligence.  The
duration of these  agreements do not extend beyond one year. The purchases under
the portfolio flow purchase  agreements  were $9,445 and $1,713,  which excludes
amounts  purchased  and  subsequently  sold to FINCO  (see Note 3),  for the six
months ended June 30, 2002 and 2001, respectively.


NOTE 10. MANDATORILY REDEEMABLE PREFERRED STOCK

In April  2002,  the  Company  completed  a sale of  $7,000  of  Series B junior
preferred  stock to certain members of its existing  investor  group,  including
Madison Dearborn Capital Partners III, L.P., the Company's majority stockholder.


NOTE 11. AMENDMENT TO CREDIT AND WAREHOUSE FACILITIES

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

The  Company  and the  lenders  to the  Credit  Facility  amended  the  facility
effective  April  10,  2002.  The  amendment  to the  Credit  Facility  included
provisions  that amended the financial  covenants,  waived  certain  defaults of
covenants and breaches in representations and warranties, increased the interest
rate on borrowings  pursuant to the facility (as discussed  below),  and, during
2002,  reduced the Company's  availability  under its Credit Facility by $5,000,
and limited capital  expenditures,  investments and acquisitions.  In connection
with the amendment,  the Company also issued 7,000 shares of its Series B Junior
Preferred Stock with attached warrants to acquire 71,429 shares of the Company's
Senior Common Stock to certain members of its existing investor group, including
Madison  Dearborn Capital Partners III, L.P. and Madison Dearborn Special Equity
III, L.P. for a total purchase  price of $7,000.  The proceeds of this sale were
used to repay the  Revolving  Facility  in the amount of $3,500 and the  balance
pro-rata to the Term A and B loans,  as provided  in the Credit  Facility.  From
April  10,  2002  until  such  time as the  Company  delivers  to the  lenders a
compliance  certificate for the period ended December 31, 2002, borrowings under
the  Revolving  Facility  and  Term A Loan  of the  Credit  Facility  will  bear
interest,  at the Company's  option at (a) the lender's prime rate plus 2.75% or
at (b) the  Eurodollar  rate plus 3.75%.  Borrowings  under the Term B Loan will
bear  interest,  at the Company's  option,  at (a) the lender's  prime rate plus
3.50% or (b) the Eurodollar rate plus 4.50%.  The amortization and maturity were
not amended.  Following this  amendment,  the Company is in compliance  with the
Credit Facility, both of which were subsquently amended as discussed below.

The  Company,  FINCO and the  lenders  to the  Warehouse  Facility  amended  the
facility  effective July 8, 2002. The amendment  includes  provisions that amend
the  financial  covenants  and waive prior  covenant  defaults  and any existing
Wind-Down  Events,  as defined  in the  Warehouse  Facility.  In  addition,  the
amendment  also places  certain  limitations  on bonus fee payments which can be
paid to OSI and its affiliates.



NOTE 12: NEW ACCOUNTING PRONOUNCEMENTS

In April 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No.
145,  Rescission  of FASB  Statements  No.  4,  44,  and 64,  Amendment  of FASB
Statement No. 13, and Technical Corrections. SFAS No. 145 updates, clarifies and
simplifies existing accounting  pronouncements.  Generally, the provisions apply
for transactions  occurring after May 15, 2002. The Company  determined that the
adoption  of SFAS  No.  145 will not have a  material  effect  on its  financial
statements.

The FASB issued SFAS No. 146, Accounting for Exit or Disposal  Activities.  SFAS
No. 146 provides  direction for  accounting and  disclosure  regarding  specific
costs  related  to an exit or  disposal  activity.  These  include,  but are not
limited to, costs to terminate a contract that is not a capital lease,  costs to
consolidate  facilities or relocate employees,  and certain termination benefits
provided to employees  that are  involuntarily  terminated  under the terms of a
one-time benefit arrangement.  The Company is required to adopt SFAS No. 146 for
any disposal  activities  initiated  after  December 31,  2002,  although  early
adoption  is  allowed.  The  Company is  currently  reviewing  the impact of the
adoption of SFAS No. 146 on its financial statements.

<PAGE>

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

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

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

Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001
-----------------------------------------------------------------------------

Consolidated  revenues  for the three  months  ended June 30,  2002 were  $156.4
million,  a decrease of $1.0  million or 0.6% from $157.4  million for the three
months  ended June 30, 2001.  Revenues by segment  prior to the  elimination  of
intercompany revenues are as follows (in millions):

                                                   Three Months Ended
                                           ----------------------------------
                                            June 30, 2002       June 30, 2001
                                           --------------      --------------

Outsourcing services                          $  87.2             $  88.3
Portfolio purchasing services                    23.8                23.2
Recovery services                                50.2                51.4
Eliminations                                     (4.8)               (5.5)
                                              -------             -------
                                              $ 156.4             $ 157.4
                                              =======             =======

Outsourcing  services' revenues of $87.2 million for the three months ended June
30, 2002 decreased $1.1 million,  or 1.2%, from $88.3 million in 2001. The lower
revenues  resulted  primarily from lower collection letter products business and
back office services  revenue offset partially by increased  financial  services
business.

Revenues from the Company's  portfolio  purchasing segment were up $0.6 million,
or 2.6%,  to $23.8  million for the three  months ended June 30, 2002 from $23.2
million in 2001.  The  increased  revenue was primarily  attributable  to higher
strategic sales of purchased  portfolios offset partially by lower servicing fee
revenue resulting from lower portfolio purchasing by FINCO.

Recovery  services'  revenues  decreased by 2.3% for the three months ended June
30, 2002 on revenue of $50.2 million compared to $51.4 million in 2001 primarily
as a result of lower student  loan,  financial  services and  telecommunications
revenue offset by increased bank card and government revenue.

Consolidated  operating  expenses,  inclusive of salaries and benefits,  service
fees and other operating and  administrative  expenses,  were $129.1 million for
the three  months  ended June 30,  2002  compared to $128.6  million in 2001,  a
slight  increase of 0.4%.  The  increase in these  operating  expenses  resulted
primarily  from increased  collection-related  expenses and postage and supplies
expenses  in the letter  products  business.  Operating  expenses  for the three
months ended June 30, 2001 included  non-cash  compensation  expense  related to
variable stock options of approximately $0.7 million. For the three months ended
June 30,  2002,  amortization  and  depreciation  charges of $12.9  million were
higher than the $12.8  million  for the  comparable  period in 2001.  The higher
amortization and depreciation  charges were due primarily to higher amortization
of purchased loans and accounts  receivable  portfolios due to higher  strategic
sales of purchased portfolios and higher depreciation resulting from current and
prior  years'  capital   expenditures   offset  by  the  cessation  of  goodwill
amortization which approximated $4.2 million in 2001.

Outsourcing  services'  operating  income  before  depreciation,   amortization,
corporate  and  shared  expenses  and  conversion,  realignment  and  relocation
expenses  but after  amortization  of purchased  loans and  accounts  receivable
portfolios  ("Adjusted  Operating  Earnings")  was $12.4  million  for the three
months ended June 30, 2002 compared to $14.7 million in 2001. The 15.6% decrease
primarily  resulted  from lower  collection  letter  products  business and back
office services revenue and higher postage expense offset partially by increased
financial services business.

Adjusted Operating Earnings for portfolio  purchasing  services was $1.0 million
for the three months ended June 30, 2002  compared to $6.0 million in 2001.  The
decrease  of  $5.0  million  was   primarily   attributable   to  the  increased
amortization of purchased loans and accounts  receivable  portfolios as a result
of the higher  strategic  sales of purchased  portfolios and lower servicing fee
revenue.

Recovery  services'  Adjusted  Operating Earnings of $12.6 million for the three
months ended June 30, 2002  compared  favorably to prior year of $11.6  million.
The  favorable  variance was  primarily  due to increased  revenues and improved
margins in the bank card and government  industry groups offset partially by the
lower student loan and telecommunications revenue.

The  Company's  earnings  before  interest  expense,  taxes,   depreciation  and
amortization  ("EBITDA")  for the three  months  ended  June 30,  2002 was $27.4
million  compared to $28.9 million for the same period in 2001. The decrease was
primarily  attributable to the lower outsourcing  services'  Adjusted  Operating
Earnings of $2.3  million  offset  partially  by the higher  recovery  services'
Adjusted Operating Earnings of $1.0 million.

As a result of the above,  the Company's  operating  income of $14.4 million for
the three months ended June 30, 2002 compared  unfavorably  to $16.1 million for
the same period in 2001.

Net interest  expense for the three months ended June 30, 2002 was $15.4 million
compared to $13.8 million for the  comparable  period in 2001.  The increase was
due primarily to the unfavorable  non-cash impact of the Company's interest rate
hedges of $2.7 million offset partially by lower interest rates.

The  provision  for income taxes of $0.2 million was provided for certain  state
and foreign income tax obligations. The net deferred tax assets at June 30, 2002
are fully offset by a valuation  allowance.  The Company generated a net taxable
operating  loss for federal and certain  state  income tax  purposes for which a
full valuation allowance was provided.

Due to the factors stated above, the Company had a net loss for the three months
ended June 30, 2002 of $1.2 million which compared unfavorably to the net income
of $2.1 million for the three months ended June 30, 2001.

Six Months Ended June 30, 2002 Compared to Six Months Ended June 30, 2001
-------------------------------------------------------------------------

Consolidated  revenues  for the six  months  ended  June 30,  2002  were  $317.5
million,  an  increase of $8.5  million or 2.8% from $309.0  million for the six
months  ended June 30, 2001.  Revenues by segment  prior to the  elimination  of
intercompany revenues are as follows (in millions):

                                                    Six Months Ended
                                           -----------------------------------
                                            June 30, 2002       June 30, 2001
                                           ---------------     ---------------

Outsourcing services                          $  177.6            $  168.8
Portfolio purchasing services                     49.2                46.6
Recovery services                                101.6               104.3
Eliminations                                     (10.9)              (10.7)
                                              --------            --------
                                              $  317.5            $  309.0
                                              ========            ========

Outsourcing  services'  revenues of $177.6 million for the six months ended June
30,  2002  increased  5.2% from  $168.8  million in 2001.  The  higher  revenues
resulted primarily from new business,  increased financial services business and
the effects of the  acquisition of Coast to Coast  Consulting  ("CCC") which was
acquired mid-March 2001 offset partially by lower back office services revenue.

Revenues from the Company's  portfolio  purchasing segment were up $2.6 million,
or 5.6%,  to $49.2  million  for the six months  ended June 30,  2002 from $46.6
million in 2001.  The  increased  revenue was primarily  attributable  to higher
strategic sales of purchased  portfolios offset partially by lower servicing fee
revenue resulting from lower portfolio purchasing by FINCO.

Recovery  services' revenues decreased by 2.6% for the six months ended June 30,
2002 on revenue of $101.6  million  compared to $104.3 million in 2001 primarily
as a result of lower student  loan,  financial  services and  telecommunications
revenue offset partially by increased bank card and government revenue.

Consolidated  operating  expenses,  inclusive of salaries and benefits,  service
fees and other operating and  administrative  expenses,  were $261.3 million for
the six months  ended  June 30,  2002  compared  to $250.5  million in 2001,  an
increase of 4.3%. The increase in these operating  expenses  resulted  primarily
from the  increased  collection-related  expenses  due to the new and  increased
financial  outsourcing  services  revenues,  the  acquisition  of CCC and higher
postage  and  supplies  expenses  in the  letter  products  business.  Operating
expenses for the six months ended June 30, 2001 included  non-cash  compensation
expense related to variable stock options of approximately $0.7 million. For the
six months ended June 30, 2002,  amortization and depreciation  charges of $24.9
million were lower than the $27.5 million for the comparable period in 2001. The
lower amortization and depreciation  charges were due primarily to the cessation
of  goodwill  amortization  which  approximated  $8.2  million  in 2001,  offset
partially  by higher  amortization  of purchased  loans and accounts  receivable
portfolios due to higher strategic sales of purchased portfolios.

Outsourcing  services'  operating  income  before  depreciation,   amortization,
corporate  and  shared  expenses  and  conversion,  realignment  and  relocation
expenses  but after  amortization  of purchased  loans and  accounts  receivable
portfolios  ("Adjusted Operating Earnings") was $25.3 million for the six months
ended  June 30,  2002  compared  to $28.1  million in 2001.  The 10.0%  decrease
primarily  resulted from lower back office  services  revenue and higher postage
expense offset  partially by the new business and increased  financial  services
revenue.

Adjusted Operating Earnings for portfolio  purchasing  services was $3.2 million
for the six months  ended June 30, 2002  compared to $9.9  million in 2001.  The
decrease  of  $6.7  million  was   primarily   attributable   to  the  increased
amortization of purchased loans and accounts  receivable  portfolios as a result
of the higher  strategic  sales of purchased  portfolios and lower servicing fee
revenue.

Recovery  services'  Adjusted  Operating  Earnings of $26.4  million for the six
months ended June 30, 2002  compared  favorably to prior year of $24.8  million.
The favorable  variance was primarily due to increased  bank card and government
revenue and improved margins in the government  business offset partially by the
lower student loan and telecommunications revenue.

For the six months ended June 30,  2002,  the Company  incurred  $2.5 million of
nonrecurring consolidation,  realignment and relocation expenses. These expenses
include  costs  resulting  from  closure  of  certain  call  centers,  severance
associated with these office closures,  severance as a result of cost reductions
and certain other one-time costs including certain investigative costs resulting
from the inaccurate financial reporting of certain transactions during and prior
to 2001 at one of the  Company's  subsidiaries,  North Shore  Agency,  Inc.  See
further  discussion  in the  Company's  Annual  Report on Form 10-K for the year
ended December 31, 2001.

The  Company's  earnings  before  interest  expense,  taxes,   depreciation  and
amortization ("EBITDA") for the six months ended June 30, 2002 was $53.8 million
compared  to  $58.5  million  for the same  period  in 2001.  The  decrease  was
primarily  attributable to the lower outsourcing  services'  Adjusted  Operating
Earnings  and  the  nonrecurring  charges  of  $2.5  million.  Adding  back  the
nonrecurring charges of $2.5 million, EBITDA was $56.3 million compared to $59.2
million after adding back the non-cash stock compensation expense in 2001.

As a result of the above,  the Company's  operating  income of $28.8 million for
the six months ended June 30, 2002 compared unfavorably to $31.0 million for the
same period in 2001.

Net interest  expense for the six months  ended June 30, 2002 was $27.2  million
compared to $30.1 million for the  comparable  period in 2001.  The decrease was
due  primarily  to lower  interest  rates offset  partially  by the  unfavorable
non-cash impact of the Company's interest rate hedges of $1.8 million.

The  provision  for income taxes of $0.4 million was provided for certain  state
and foreign income tax obligations. The net deferred tax assets at June 30, 2002
are fully offset by a valuation  allowance.  The Company generated a net taxable
operating  loss for federal and certain  state  income tax  purposes for which a
full valuation allowance was provided.

Due to the factors  stated above,  the Company had net income for the six months
ended June 30, 2002 of $1.2 million  which  compared  favorably to net income of
$0.6 million for the six months ended June 30, 2001.

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

At June 30, 2002,  the Company had cash and cash  equivalents  of $10.6 million.
The Company's credit agreement  currently provides for a $70.0 million revolving
credit  facility,  which  allows the Company to borrow for  working  capital and
general corporate purposes,  subject to certain conditions. As of June 30, 2002,
the Company had $50.0 million  outstanding  under the revolving  credit facility
leaving $10.7 million, after outstanding letters of credit,  available under the
revolving credit facility.

In April 2002,  the Company  completed a sale of $7.0 million of Series B junior
preferred  stock to certain members of its existing  investor  group,  including
Madison Dearborn Capital Partners III, L.P., the Company's majority stockholder.
The  proceeds  from the sale were used to repay  debt under the  Company's  bank
credit facility.

In May 2002, the Company issued  40,816.33 shares of its Voting common stock for
the purchase of $2.0 million of equipment.

Since  December  31,  2001,  cash and cash  equivalents  increased  $1.1 million
primarily due to cash from  operating  activities  and  portfolio  purchasing of
$10.6 million,  issuance of preferred stock of $7.0 million and borrowings under
the revolving  credit  facility of $4.0 million offset by cash utilized for debt
repayments of $12.4 million,  payment of deferred financing fees of $3.8 million
and capital expenditures of $4.4 million. The Company also held $25.0 million of
cash and cash  equivalents for clients in restricted  trust accounts at June 30,
2002.

For the six months ended June 30, 2001, cash and cash equivalents decreased $2.0
million  primarily due to cash utilized for the  acquisitions of CCC and Pacific
Software  Consulting of $21.3  million,  debt  repayments  of $5.1  million,  an
earnout payment of $3.0 million and capital  expenditures of $5.7 million offset
by cash from operating  activities and portfolio purchasing of $10.8 million and
net proceeds from the issuance of senior common stock of $22.0 million.

For the first six months in 2002, the Company made capital  expenditures of $4.4
million  primarily for the replacement and upgrading of equipment,  expansion of
facilities  and expansion of the Company's  information  services  systems.  The
Company anticipates total capital spending of approximately $10.0 million during
2002.  Subject to compliance  with the  provisions of its debt  agreements,  the
Company  expects  to finance  future  capital  expenditures  with cash flow from
operations,  borrowings and capital  leases.  The Company will reduce its future
capital expenditures to the extent it is unable to fund its capital plan.

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

The  Company  and the  lenders  to the  Credit  Facility  amended  the  facility
effective  April  10,  2002.  The  amendment  to the  Credit  Facility  included
provisions  that amended the financial  covenants,  waived  certain  defaults of
covenants and breaches in representations and warranties, increased the interest
rate on borrowings  pursuant to the facility (as discussed  below),  and, during
2002,  reduced the Company's  availability  under its Credit Facility by $5,000,
and limited capital  expenditures,  investments and acquisitions.  In connection
with the amendment,  the Company also issued 7,000 shares of its Series B Junior
Preferred Stock with attached warrants to acquire 71,429 shares of the Company's
Senior Common Stock to certain members of its existing investor group, including
Madison  Dearborn Capital Partners III, L.P. and Madison Dearborn Special Equity
III, L.P. for a total purchase  price of $7,000.  The proceeds of this sale were
used to repay the  Revolving  Facility  in the amount of $3,500 and the  balance
pro-rata to the Term A and B loans,  as provided  in the Credit  Facility.  From
April  10,  2002  until  such  time as the  Company  delivers  to the  lenders a
compliance  certificate for the period ended December 31, 2002, borrowings under
the  Revolving  Facility  and  Term A Loan  of the  Credit  Facility  will  bear
interest,  at the Company's  option at (a) the lender's prime rate plus 2.75% or
at (b) the  Eurodollar  rate plus 3.75%.  Borrowings  under the Term B Loan will
bear  interest,  at the Company's  option,  at (a) the lender's  prime rate plus
3.50% or (b) the Eurodollar rate plus 4.50%.  The amortization and maturity were
not amended.  Following this  amendment,  the Company is in compliance  with the
Credit Facility.

The  Company,  FINCO and the  lenders  to the  Warehouse  Facility  amended  the
facility  effective  July 8,  2002.  The  amendment  to the  Warehouse  Facility
includes  provisions that amend the financial covenants and waive prior covenant
defaults  and  any  existing  Wind-Down  Events,  as  defined  in the  Warehouse
Facility.  In addition,  the amendment also places certain  limitations on bonus
fee payments which can be paid to OSI and its affiliates.

FINCO is a special purpose and bankruptcy remote entity that is not consolidated
by the  Company.  The Company  accounts  for its  investment  in FINCO under the
equity method of accounting.  The Company does not consolidate  FINCO because an
unrelated  third party  investor in FINCO holds the  majority  voting  rights of
FINCO, has decision-making authority over the operations of FINCO, including the
authority  to make all  decisions  and to take all actions  with  respect to the
retention or removal of a subsidiary  of the Company as a provider of collection
services for FINCO's  portfolios,  and maintains a substantial equity investment
in FINCO. The FASB is currently  reviewing the rules surrounding special purpose
entities.  The FASB has issued a preliminary  draft of proposed rules  regarding
the consolidation of special purpose entities. The FASB expects to finalize this
project  by August of 2002.  If the  Company  were  required  to adopt the rules
prescribed  in the current  FASB  project,  it would be required to  consolidate
FINCO.  If required to  consolidate  FINCO,  the  Company  could  possibly be in
violation of its debt  covenants and would be required to seek a waiver or amend
its debt agreements.

Recent Accounting Pronouncements
--------------------------------

See  discussion in Note 12 of the Condensed  Consolidated  Financial  Statements
included elsewhere herein.

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

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

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

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

<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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


<PAGE>

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

         From time to time,  the Company and  certain  of its  subsidiaries  are
         involved  in  various  investigations,  claims  and  legal  proceedings
         covering a wide range of  matters  that  arise in the normal  course of
         business  and are  routine  to the nature  of the  Company's  business.
         Other  information  with respect to legal  proceedings  appears  in the
         Company's  Annual Report on  Form 10-K for the year ended  December 31,
         2001.


Item 2.  Changes in Securities

         See  Note  10   of  the  Condensed  Consolidated  Financial  Statements
         included  elsewhere  herein.  The  proceeds  from  the sale of Series B
         junior preferred stock were used to repay debt.

         In May 2002, the Company issued  40,816.33 shares  of its Voting common
         stock for the purchase of $2.0 million of equipment.


Item 3.  Defaults Upon Senior Securities

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


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

         None


Item 5.  Other Information

         None


Item 6.  Exhibits and Reports on Form 8-K

         (a).  Exhibits

               Exhibit  99.1  Certification  of  President  and Chief  Executive
               Officer  Pursuant to 18 U.S.C.  Section 1350, As Adopted Pursuant
               to Section 906 of the Sarbanes-Qxley Act of 2002.

               Exhibit 99.2   Certification  of  Executive  Vice President   and
               Chief Financial  Officer  Pursuant to 18 U.S.C.  Section 1350, As
               Adopted  Pursuant  to Section  906 of the  Sarbanes-Qxley  Act of
               2002.

         (b).  Reports on Form 8-K

               There  were no  reports  on Form 8-K  filed  for the  three-month
               period ended June 30, 2002.

<PAGE>



                                   SIGNATURES

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



                                        OUTSOURCING SOLUTIONS INC.
                                        (Registrant)



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



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


Date:    August 13, 2002