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, 2001
                                --------------------------------

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, 2001
-----------------------                                      --------------
Senior common stock                                             489,795.93
Voting common stock                                           6,088,479.30
Non-voting common stock                                         480,321.30
                                                              ------------
                                                              7,058,596.53
                                                              ============

<PAGE>


PAGE 2


                               OUTSOURCING SOLUTIONS INC.
                               --------------------------
                                    AND SUBSIDIARIES
                                    ----------------



                                TABLE OF CONTENTS


Part I.    Financial Information                                            Page

   Item 1. Financial Statements (unaudited)

           Condensed Consolidated Balance Sheets
           September 30, 2001 and December 31, 2000..........................3


           Condensed Consolidated Statements of Operations for
           the three and nine months ended September, 2001 and 2000..........4


           Condensed Consolidated Statements of Cash Flows for
           the nine months ended September 30, 2001 and 2000.................5


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


   Item 2. Management's Discussion and Analysis of Financial Condition
           and Results of Operations.........................................10


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


Part II.      Other Information..............................................15

<PAGE>


PAGE 3

OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

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

ASSETS                                            September 30,    December 31,
                                                       2001            2000
                                                  --------------   -------------

Cash and cash equivalents                          $   6,425         $ 10,273

Cash and cash equivalents held for clients            23,479           21,970

Accounts receivable - trade, less allowance
  for doubtful receivables of  $340 and $447          74,141           62,876

Purchased loans and accounts receivable
  portfolios                                          20,492           24,690

Property and equipment, net                           45,737           46,601

Intangible assets, net                               426,065          417,084

Deferred financing costs, less accumulated
  amortization of $7,857 and $4,538                   19,777           22,934

Other assets                                          42,202           30,426
                                                     -------          -------

             TOTAL                                  $658,318         $636,854
                                                    ========         ========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Accounts payable - trade                            $ 14,371         $ 14,446

Collections due to clients                            23,479           21,970

Accrued salaries, wages and benefits                  16,326           15,195

Debt                                                 537,198          539,463

Other liabilities                                     78,919           71,080

Commitments and contingencies (Note 2 and 4)

Mandatorily redeemable preferred stock;
redemption amount of $135,976 and $123,115           118,244          103,455

Stockholders' deficit:
  Senior common stock; $.01 par value;
    authorized 900,000 shares, 489,795.93
    issued in 2001 and outstanding                         5                -
  Voting common stock; $.01 par value;
    authorized 20,000,000 shares,
    9,166,728.37 shares issued                            92               92
  Non-voting common stock; $.01 par value;
    authorized 2,000,000 shares, 480,321.30
    issued and outstanding                                 5                5
  Paid-in capital                                    223,277          200,537
  Accumulated deficit                               (207,011)        (192,715)
  Accumulated other comprehensive loss                (9,799)               -
                                                     -------          -------
                                                       6,569            7,919
  Notes receivable from management
    for shares sold                                   (1,931)          (1,817)
  Voting common stock in treasury,
    at cost; 3,078,249.07 shares                    (134,857)        (134,857)
                                                    --------         --------
        Total stockholders' deficit                 (130,219)        (128,755)
                                                    --------         --------
               TOTAL                                $658,318         $636,854
                                                    ========         ========





               The accompanying notes are an integral part of the
             unaudited condensed consolidated financial statements.
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,
                                                            ---------------------    ---------------------
                                                               2001       2000         2001       2000
<S>                                                        <C>         <C>          <C>        <C>

REVENUES                                                   $ 151,023   $ 133,871    $460,042   $404,494

EXPENSES:
     Salaries and benefits                                    77,956      66,026      232,846    198,630
     Service fees and other operating and administrative
       expenses                                               43,943      41,897      139,577    126,908
     Amortization of purchased loans and accounts
       receivable portfolios                                   4,770       6,591       16,761     21,376
     Amortization of goodwill and other intangibles            4,199       3,980       12,412     11,929
     Depreciation expense                                      3,532       3,956       10,839     12,067
     Nonrecurring realignment expenses                             -       1,742            -      2,742
                                                             -------     -------      -------    -------
         Total expenses                                      134,400     124,192      412,435    373,652
                                                             -------     -------      -------    -------

OPERATING INCOME                                              16,623       9,679       47,607     30,842
INTEREST EXPENSE - Net                                        16,499      15,377       46,579     44,829
                                                             -------     -------      -------    -------
INCOME (LOSS) BEFORE INCOME TAXES                                124      (5,698)       1,028   ( 13,987)
PROVISION FOR INCOME TAXES                                       185          65          535        359
                                                             -------     -------      -------    -------
NET INCOME (LOSS)                                                (61)     (5,763)         493   ( 14,346)
PREFERRED STOCK DIVIDEND REQUIREMENTS AND ACCRETION
   OF SENIOR PREFERRED STOCK                                   5,079       4,497       14,789     13,104
                                                             -------     -------      -------    -------

NET LOSS TO COMMON STOCKHOLDERS                              $(5,140)   $(10,260)    $(14,296)  $(27,450)
                                                             ========   =========    =========  =========
</TABLE>





















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


<PAGE>


PAGE 11


OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                   Nine Months Ended
                                                                                     September 30,
                                                                                 ---------------------
                                                                                   2001       2000
<S>                                                                                <C>        <C>
OPERATING ACTIVITIES AND PORTFOLIO PURCHASING:
  Net income (loss)                                                                $   493   $(14,346)
  Adjustments to reconcile net income (loss) to net cash from operating
    activities and portfolio purchasing:
   Depreciation and amortization                                                    29,132     27,308
   Amortization of purchased loans and accounts receivable portfolios               16,761     21,376
   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                         (12,563)    (8,433)
     Accounts receivable and other assets                                          (19,406)   (10,370)
     Accounts payable, accrued expenses and other liabilities                       (4,265)     3,957
                                                                                   --------  --------
        Net cash from operating activities and portfolio purchasing                 10,893     19,492
                                                                                   -------   --------

INVESTING ACTIVITIES:
  Acquisition of property and equipment                                             (9,493)   (13,883)
  Payment for acquisitions, net of cash acquired                                   (21,653)   (15,150)
  Purchases of loans and accounts receivable portfolios for resale to FINCO        (59,722)   (70,721)
  Sales of loans and accounts receivable portfolios to FINCO                        59,722     70,721
  Other                                                                             (3,025)    (1,361)
                                                                                   -------   --------
        Net cash used by investing activities                                      (34,171)   (30,394)
                                                                                   -------   --------

FINANCING ACTIVITIES:
  Borrowings under revolving credit agreement                                      242,400    244,350
  Repayments under revolving credit agreement                                     (232,700)  (227,850)
  Repayments of debt                                                               (12,112)    (2,512)
  Proceeds from issuance of common stock                                            22,004        401
  Proceeds from term loans                                                               -        246
  Deferred financing fees                                                             (162)         -
                                                                                   --------  --------
           Net cash from financing activities                                       19,430     14,635
                                                                                   -------   --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                (3,848)     3,733

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                      10,273      6,059
                                                                                   -------   --------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                           $ 6,425   $  9,792
                                                                                   =======   ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during period for interest                                             $38,634   $ 32,230
                                                                                   =======   ========
  Net cash paid during period for taxes                                            $   413   $    241
                                                                                   =======   ========

SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION:
  Accrued dividends on mandatorily redeemable preferred stock                      $12,861   $ 11,235
                                                                                   =======   ========
  Accretion of mandatorily redeemable preferred stock                              $ 1,928   $  1,869
                                                                                   =======   ========
  Notes receivable for common stock                                                $     -   $  1,400
                                                                                   =======   ========

</TABLE>

               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 nine months ended September 30, 2001 are not necessarily indicative of
the results  that may be expected for the year ending  December 31, 2001.  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, 2000.


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
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
September 30, 2001.


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.

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


                                     Three Months Ended       Nine Months Ended
                                        September 30,           September 30,
                                     -------------------    --------------------
                                       2001       2000        2001       2000
Sales of purchased loans and
  accounts receivable portfolios
  by the Company to FINCO            $16,093   $ 16,415    $ 59,722   $ 70,721

Servicing fees paid by
  FINCO to the Company               $ 9,853   $ 10,319    $ 30,022   $ 19,656


Sales of purchased loans and accounts receivable  portfolios  ("Receivables") by
the Company to FINCO were in the same  amount and  occurred  shortly  after such
portfolios were acquired by the Company from the various unrelated  sellers.  In
conjunction with sales of Receivables to FINCO and the servicing agreement,  the
Company  recorded  servicing assets which are being amortized over the servicing
agreement.  The carrying value of such servicing  assets,  which are included in
other assets in the  accompanying  condensed  consolidated  balance  sheet,  was
$15,524 at September 30, 2001 and was $5,612 at December 31, 2000.

At September 30, 2001 and December 31, 2000,  FINCO had unamortized  Receivables
of $87,618 and $76,908,  respectively.  At  September  30, 2001 and December 31,
2000,  FINCO had  outstanding  borrowings of $66,706 and $67,636,  respectively,
under its revolving warehouse financing arrangement.

<PAGE>


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

                                    Three Months Ended        Nine Months Ended
                                       September 30,            September 30,
                                   --------------------     --------------------
                                      2001      2000           2001       2000

Revenues                            $24,775   $28,940        $83,965    $55,842
Income from operations                1,999     1,126          6,630      2,989
Net income (loss)                     1,156       (55)         3,593        509


NOTE 4:  ACQUISITIONS

On March 12, 2001, the Company through a newly formed limited liability company,
Coast to Coast  Consulting,  LLC,  acquired  certain assets and assumed  certain
liabilities  of Coast to Coast  Consulting,  Inc.  ("CCC"),  a  service  company
providing  highly  skilled  experts to health care  clients to assist with their
on-site,  back office functions such as billing,  collections,  special projects
and other areas.  Total cash  consideration  for CCC was  approximately  $16,699
including  transaction  costs  of  $150.  The  acquisition  contains  a  certain
contingent  payment  obligation  based on the attainment of a certain  financial
performance  target over the next three  years.  The future  contingent  payment
obligation,  if any, is expected to be accounted for as  additional  goodwill as
the payment is made.

On April 30, 2001, the Company through a newly formed limited liability company,
Pacific  Software  Consulting,  LLC,  acquired  (i)  certain  assets and assumed
certain  liabilities of Pacific Software  Consulting,  Inc.  ("PSC"),  a service
company  providing  highly skilled  consultants to banks to assist in their back
office  functions,   and  (ii)  associated   patentable  property.   Total  cash
consideration  for  these   acquisitions  was  approximately   $4,954  including
transaction  costs of $45. In connection  with these  acquisitions,  the Company
agreed to certain  contingent  payment  obligations  based on the  attainment of
certain  financial  performance targets  through  September 2002. The future
contingent  payment  obligations,  if any, are  expected to be accounted  for as
additional goodwill as the payments are made.

The above  acquisitions were accounted for under the purchase method. The excess
of cost  over the fair  value of net  assets  of  businesses  acquired  is being
amortized on a  straight-line  basis over 30 years.  The  purchase  price of the
acquisitions was financed under the Company's revolving credit facility. Results
of operations  for the acquired  businesses  were  included in the  consolidated
financial statements from their respective acquisition dates.


NOTE 5:  DERIVATIVES AND HEDGING ACTIVITIES

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

At September  30, 2001,  the Company had  interest  rate swap and collared  swap
agreements  outstanding  in  the  notional  amounts  of  $75,000  and  $225,000,
respectively.  At December  31,  2000,  the Company had  interest  rate swap and
collared  swap  agreements  outstanding  in the notional  amounts of $50,000 and
$150,000, respectively.

In September  2001, the Company  accelerated the call option of an interest rate
swap agreement  maturing November 2006 relating to $50,000 nominal amount of its
11.0%  senior  subordinated  notes and  entered  into a new  interest  rate swap
agreement maturing November 2006 relating to $75,000 nominal amount of its 11.0%
senior subordinated notes. Under this agreement, the Company pays floating three
month  LIBOR plus 5.50%.  The  financial  institution  has the right to call the
agreement,  at its  discretion,  after May 1, 2003.  In  addition,  the  Company
entered into an interest  rate collared swap  agreement  maturing  November 2006
relating to $75,000  nominal amount of its term debt.  Under the agreement,  the
Company pays floating  three month LIBOR,  capped at 6.75%,  plus the applicable
margin as set forth in the credit agreement.  In the event,  however,  the three
month LIBOR drops below  2.50% from  November 1, 2001 to April 30,  2002,  2.85%
from May 1, 2002 to April 30,  2003,  or 4.10% from May 1, 2003 to  November  1,
2006,  the Company  would be required to pay 5.50% plus the  applicable  margin,
until such time the three month LIBOR  rises  above the period  floor,  at which
time the rate returns to a variable rate.

On January 1, 2001, the Company  implemented  Statement of Financial  Accounting
Standards  (SFAS) No. 133,  Accounting  for Derivative  Instruments  and Hedging
Activities,  as  amended by SFAS No.  137 and SFAS No.  138  (collectively,  the
Statement).  This  Statement  requires all  derivatives  to be recognized in the
balance  sheet at fair value,  with changes in that fair value to be recorded in
current earnings or deferred in other comprehensive income, depending on whether
the  derivative  instrument  qualifies  as a hedge and, if so, the nature of the
hedging  activity.  The  Company's  transition  adjustment  upon adoption of the
Statement  required the recording of a liability of $3,691 with an offset of the
same amount to accumulated other comprehensive income. As of September 30, 2001,
the  liability  is $12,361 and is included  in other  liabilities  and $9,799 is
included  in  accumulated  other  comprehensive  income  (loss).  The Company is
subject  to the risk of  fluctuating  interest  rates in the  normal  course  of
business.  From time to time and as required by the Company's credit  agreement,
the Company will employ  derivative  financial  instruments  as part of its risk
management program. The Company's objective is to manage risks and exposures and
not to trade such  instruments for profit and loss. 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  quarter  ended
September 30, 2001, the Company recorded, as part of interest expense, a loss of
$2,562 due to the hedges'  ineffectiveness.  For the nine months ended September
30, 2001, the net impact on interest expense is $2,562.


NOTE 6:  COMPREHENSIVE INCOME (LOSS)

The  components  of total  comprehensive  income  (loss) for the  periods  ended
September 30 are as follows:

                                      Three Months Ended       Nine Months Ended
                                         September 30,           September 30,
                                      ------------------      ------------------
                                        2001      2000        2001       2000

Net income (loss)                    $   (61)   $(5,763)    $   493   $(14,346)
Other comprehensive income item:
  Net loss on cash flow
  hedging instruments                 (3,178)         -      (9,799)         -
                                     -------    -------     -------   --------
Total comprehensive income (loss)    $(3,239)   $(5,763)    $(9,306)  $(14,346)
                                     ========   =======     =======   ========


NOTE 7:  STOCKHOLDERS' DEFICIT

In April 2001,  the  Company  completed  a sale of  489,795.93  shares of senior
common  stock for  $24,000  ($22,004  after all related  expenses)  to a private
equity  firm and to certain  members of its  existing  private  investor  group,
including  Madison Dearborn  Capital Partners III, L.P., the Company's  majority
stockholder.


NOTE 8:  NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141"),  Business  Combinations.
SFAS 141  requires  that  the  purchase  method  of  accounting  be used for all
business  combinations  initiated  after  September  30,  2001  and  establishes
specific criteria for recognition of intangible assets separately from goodwill.
For business  combinations  initiated  after  September 30, 2001,  SFAS 141 also
requires that  unallocated  negative  goodwill be written off  immediately as an
extraordinary  gain.  Any  unamortized  deferred  credit arising from a business
combination  completed  before July 1, 2001 will be recognized as the cumulative
effect of a change in accounting principle.  The Company is currently evaluating
the impact of SFAS 141 on its financial statements.

Also in July 2001, the FASB issued Statement of Financial  Accounting  Standards
No. 142 ("SFAS 142"),  Goodwill and Other Intangible Assets. SFAS 142 eliminates
the  amortization  of goodwill  and instead  requires  goodwill to be tested for
impairment  annually at the reporting unit level.  Also,  intangible  assets are
required to be amortized  over their useful lives and reviewed for impairment in
accordance with Statement of Financial  Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. Under SFAS 142, if the intangible asset has an indefinite useful life, it is
not amortized until its life is determined to be finite. The Company is required
to adopt SFAS on January 1, 2002,  and earlier  adoption is not  permitted.  The
Company  is  currently  evaluating  the  impact  of  SFAS  142 on its  financial
statements. Goodwill amortization recorded for the quarter and nine months ended
September 30, 2001 was $4.2 million and $12.4 million, respectively, compared to
$4.0 million and $11.9 million for the  respective  periods ended  September 30,
2000.

In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144 ("SFAS  144"),  Accounting  for the  Impairment  or Disposal  of  Long-Lived
Assets. SFAS 144 addresses financial accounting and reporting for the impairment
or disposal of long-lived assets. The Company is currently evaluating the impact
of SFAS 144 on its financial statements.



<PAGE>


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

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

Three Months Ended Sept. 30, 2001 Compared to Three Months Ended Sept. 30, 2000
-------------------------------------------------------------------------------

Revenues  for the three  months  ended  September  30, 2001 were $151.0  million
compared to $133.9  million in the same period last year - an increase of 12.8%.
The  revenue  increase  of $17.1  million was due to  increased  collection  and
outsourcing  services  revenues  offset  partially by lower  portfolio  services
revenues.  The collection  services revenues increased 1.9% to $86.7 million for
the three  months  ended  September  30,  2001 from $85.1  million in 2000.  The
increased revenues were due primarily to increased letter series business offset
partially by lower student loan  business.  Revenues from  outsourcing  services
increased  74.8% to $41.6 million for the three months ended  September 30, 2001
from $23.8 million for the comparable period in 2000. The increased  outsourcing
services  revenues of $17.8  million  were due  primarily  to new and  increased
existing business and the acquisitions of RWC Consulting Group ("RWC"), Coast to
Coast Consulting ("CCC") and Pacific Software Consulting ("PSC").  Revenues from
portfolio  services of $22.7 million  compared  unfavorably  to $25.0 million in
2000 due primarily to the continued  negative effect on revenues  resulting from
the shift to off-balance sheet purchased portfolios and lower strategic sales of
portfolios  partially  offset  by  increased  servicing  fees  due to  increased
collections  from the increased  level of off-balance  sheet purchased loans and
accounts receivable  portfolios during 1999, 2000 and 2001. The Company believes
that its revenues and operating income were negatively affected by the terrorist
attacks of September 11, 2001.

Operating expenses,  inclusive of salaries and benefits,  service fees and other
operating and administrative  expenses, were $121.9 million for the three months
ended September 30, 2001 and $107.9 million for the comparable  period in 2000 -
an  increase  of  13.0%.  The  increase  in these  operating  expenses  resulted
primarily from the RWC, CCC and PSC acquisitions and the increased  expenses due
to the increased  revenues of outsourcing  services.  For the three months ended
September 30, 2001,  amortization and depreciation charges of $12.5 million were
lower than the $14.5 million for the comparable  period in 2000 by $2.0 million.
The lower  amortization and depreciation  charges resulted  primarily from lower
portfolio  amortization  as a result of lower  strategic sales of portfolios and
the shift towards  off-balance  sheet  purchased  loans and accounts  receivable
portfolios.

In the three months ended September 30, 2000, the Company incurred  nonrecurring
realignment expenses of $1.7 million which included costs for closure of certain
call centers,  severance associated with these office closures and certain other
one-time costs.

Earnings before interest expense, taxes,  depreciation and amortization (EBITDA)
for the three  months ended  September  30, 2001 was $29.1  million  compared to
$24.2  million  for  the  same  period  in  2000.  The  increase  was  primarily
attributable to the three acquisitions, the higher outsourcing services revenues
and the 2000 nonrecurring  charges of $1.7 million.  EBITDA of $29.1 million for
the three months ended  September 30, 2001  compared  favorably to $25.9 million
for the same period in 2000 after adding back the nonrecurring charges.

As a result of the above,  the Company's  operating  income of $16.6 million for
the three months ended September 30, 2001 compared favorably to $9.7 million for
the same period in 2000.

Net interest  expense for the three months  ended  September  30, 2001 was $16.5
million  compared  to $15.4  million  for the  comparable  period  in 2000.  The
increase was due primarily to additional  interest  expense of $2.6 million as a
result of the Company's interest rate hedges'  ineffectiveness  partially offset
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  September  30, 2001 are fully  offset by a  valuation  allowance.
During the three months ended  September  30, 2001,  the net deferred tax assets
and the  valuation  allowance  did not change  from the  previous  quarter.  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  September  30, 2001 of $0.1 million which  compared  favorably to the net
loss of $5.8 million for the three months ended September 30, 2000.


Nine Months Ended Sept. 30, 2001 Compared to Nine Months Ended Sept. 30, 2000
-----------------------------------------------------------------------------

Revenues  for the nine months  ended  September  30,  2001 were  $460.0  million
compared to $404.5 million in the same period last year - an increase of 13.7 %.
The revenue increase of $55.5 million was primarily due to increased outsourcing
services  revenues  offset  partially  by  lower  portfolio  services  revenues.
Revenues from  outsourcing  services  increased  87.6% to $122.9 million for the
nine  months  ended  September  30, 2001 from $65.5  million for the  comparable
period in 2000.  The increased  outsourcing  services  revenues of $57.4 million
were due primarily to new and increased  existing  business and the acquisitions
of RWC, CCC and PSC. Revenues from portfolio  services of $66.1 million compared
unfavorably  to $68.2  million in 2000 due to the continued  negative  effect on
revenues resulting from the shift to off-balance sheet purchased  portfolios and
lower strategic portfolio sales partially offset by increased servicing fees due
to increased collections from the increased level of off-balance sheet purchased
loans and  accounts  receivable  portfolios  during  1999,  2000 and  2001.  The
collection services revenues increased slightly, 0.1%, to $271.0 million for the
nine months ended  September 30, 2001 from $270.8 million in 2000. The increased
revenues were due primarily to increased  government and letter series  business
offset by lower bank card,  student loan and  telecommunications  business.  The
Company believes that its revenues and operating income were negatively affected
by the terrorist attacks of September 11, 2001.

Operating expenses,  inclusive of salaries and benefits,  service fees and other
operating and administrative  expenses,  were $372.4 million for the nine months
ended September 30, 2001 and $325.5 million for the comparable  period in 2000 -
an  increase  of  14.4%.  The  increase  in these  operating  expenses  resulted
primarily from the RWC, CCC and PSC acquisitions and the increased  expenses due
to the increased  revenues of outsourcing  services.  Operating expenses for the
nine months ended  September 30, 2001  included  non-cash  compensation  expense
related to variable  stock options of  approximately  $0.7 million.  Included in
operating  expenses for the nine months ended  September  30, 2000,  the Company
incurred approximately $0.2 million of additional compensation expense resulting
from the redemption of vested stock options. For the nine months ended September
30, 2001, amortization and depreciation charges of $40.0 million were lower than
the $45.4 million for the comparable  period in 2000 by $5.4 million.  The lower
amortization  and depreciation  charges resulted  primarily from lower portfolio
amortization as a result of the shift towards  off-balance sheet purchased loans
and accounts receivable  portfolios and lower depreciation  resulting from lower
current year capital  expenditures  and mix of current and prior years'  capital
expenditures.

In the nine months ended September 30, 2000, the Company  incurred  nonrecurring
realignment expenses of $2.7 million which included costs for closure of certain
call  centers,  severance  associated  with these call centers and certain other
one-time costs.

Earnings before interest expense, taxes,  depreciation and amortization (EBITDA)
for the nine months ended September 30, 2001 was $87.6 million compared to $76.2
million for the same period in 2000. The increase was primarily  attributable to
the three  acquisitions,  the higher outsourcing  services revenues and the 2000
nonrecurring   charges  of  $2.7  million.   Adding  back  the  non-cash   stock
compensation  expense,  EBITDA  was  $88.3  million  for the nine  months  ended
September 30, 2001; this compared favorably to $79.1 million for the same period
in  2000  after  adding  back  the  nonrecurring   charges  and  the  additional
compensation expense.

As a result of the above,  the Company's  operating  income of $47.6 million for
the nine months ended September 30, 2001 compared favorably to $30.8 million for
the same period in 2000.

Net  interest  expense for the nine months  ended  September  30, 2001 was $46.6
million  compared  to $44.8  million  for the  comparable  period  in 2000.  The
increase was due primarily to additional  interest  expense of $2.6 million as a
result of the Company's interest rate hedges'  ineffectiveness  offset partially
by lower interest rates.

The  provision  for income taxes of $0.5 million was provided for certain  state
and foreign income tax obligations. The net deferred tax assets at September 30,
2001 are fully  offset by a valuation  allowance.  During the nine months  ended
September  30, 2001,  the net deferred  tax assets and the  valuation  allowance
decreased by $0.4 million.  The decrease was caused by a reduction of deductible
temporary  differences  that exceeded the taxable net operating  loss  generated
during the current period by $0.4 million.  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 nine months
ended  September  30, 2001 of $0.5 million which  compared  favorably to the net
loss of $14.3 million for the nine months ended September 30, 2000.


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

At  September  30,  2001,  the  Company  had cash and cash  equivalents  of $6.4
million.  The Company's credit agreement  provides for a $75.0 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,  2001,  the  Company  had  $41.7  million  outstanding  under the
revolving credit facility leaving $24.7 million,  after  outstanding  letters of
credit, available under the revolving credit facility.

In April 2001,  the Company  completed a sale of $24.0  million of senior common
stock to a private  equity firm and to certain  members of its existing  private
investor  group,  including  Madison  Dearborn  Capital  Partners III, L.P., the
Company's majority stockholder.  The net proceeds of $22.0 million from the sale
were used to repay debt under the Company's bank credit facility.

Since  December  31,  2000,  cash and cash  equivalents  decreased  $3.8 million
primarily  due to cash  utilized  for the CCC  and  PSC  acquisitions  of  $21.7
million,  debt  repayments of $12.1 million,  an earnout payment of $3.0 million
and  capital  expenditures  of  $9.5  million  offset  by  cash  from  operating
activities  and portfolio  purchasing  of $10.9  million,  borrowings  under the
revolving  credit facility of $9.7 million and net proceeds from the issuance of
senior  common stock of $22.0  million.  The Company also held $23.5  million of
cash for clients in restricted trust accounts at September 30, 2001.

For the nine  months  ended  September  30,  2000,  cash  and  cash  equivalents
increased  $3.7 million  primarily  due to cash from  operating  activities  and
portfolio  purchasing of $19.5 million and net cash from financing activities of
$14.6 million,  primarily borrowings under the revolving credit facility, offset
by the use of cash of $30.4 million primarily for capital  expenditures of $13.9
million  and $15.2  million  for the  acquisition  of certain  assets of RWC. In
addition to the cash consideration of $15.2 million, the purchase price included
voting  common  stock  worth $2.0  million  and a $5.0  million  18%  unsecured,
subordinated note along with a contingent payment obligation.

For the first nine months in 2001, the Company made capital expenditures of $9.5
million  primarily for the replacement and upgrading of equipment,  expansion of
facilities  and expansion of the Company's  information  services  systems.  The
Company anticipates capital spending of approximately $13.8 million during 2001,
which  the  Company  intends  to fund from  cash  flow  from  operations  and if
necessary, borrowings under the revolving credit facility.


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

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141"),  Business  Combinations.
SFAS 141  requires  that  the  purchase  method  of  accounting  be used for all
business  combinations  initiated  after  September  30,  2001  and  establishes
specific criteria for recognition of intangible assets separately from goodwill.
For business  combinations  initiated  after  September 30, 2001,  SFAS 141 also
requires that  unallocated  negative  goodwill be written off  immediately as an
extraordinary  gain.  Any  unamortized  deferred  credit arising from a business
combination  completed  before July 1, 2001 will be recognized as the cumulative
effect of a change in accounting principle.  The Company is currently evaluating
the impact of SFAS 141 on its financial statements.

Also in July 2001, the FASB issued Statement of Financial  Accounting  Standards
No. 142 ("SFAS 142"),  Goodwill and Other Intangible Assets. SFAS 142 eliminates
the  amortization  of goodwill  and instead  requires  goodwill to be tested for
impairment  annually at the reporting unit level.  Also,  intangible  assets are
required to be amortized  over their useful lives and reviewed for impairment in
accordance with Statement of Financial  Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. Under SFAS 142, if the intangible asset has an indefinite useful life, it is
not amortized until its life is determined to be finite. The Company is required
to adopt SFAS on January 1, 2002,  and earlier  adoption is not  permitted.  The
Company  is  currently  evaluating  the  impact  of  SFAS  142 on its  financial
statements. Goodwill amortization recorded for the quarter and nine months ended
September 30, 2001 was $4.2 million and $12.4 million, respectively, compared to
$4.0 million and $11.9 million for the  respective  periods ended  September 30,
2000.

In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144 ("SFAS  144"),  Accounting  for the  Impairment  or Disposal  of  Long-Lived
Assets. SFAS 144 addresses financial accounting and reporting for the impairment
or disposal of long-lived assets. The Company is currently evaluating the impact
of SFAS 144 on its financial statements.


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  the  Company's   expected   capital
expenditures  and the funding  thereof,  (3) statements  regarding the Company's
ability  to fund its  future  operating  expenses  and  meet  its  debt  service
requirements as they become due, (4) any statements  preceded by, followed by or
that include the word "believes," "expects," "anticipates," "intends," "should,"
"may,"  or  similar   expressions;   and  (5)  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) legal  proceedings,  (8) environmental  investigations  and
clean up efforts,  (9) expected  synergies,  economies of scale and cost savings
from acquisitions by the Company not being fully realized or realized within the
expected  time  frames,  (10)  costs  of  operational  difficulties  related  to
integrating the operations of 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, and (13) 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.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

At December 31, 2000 (the most recent  completed  fiscal year),  the Company had
interest rate swap and collared swap agreements outstanding.  In September 2001,
the  Company  accelerated  the call option of an  interest  rate swap  agreement
maturing  November 2006 relating to $50.0  million  nominal  amount of its 11.0%
senior  subordinated  notes and entered into a new interest rate swap  agreement
maturing  November 2006 relating to $75.0  million  nominal  amount of its 11.0%
senior subordinated notes. Under this agreement, the Company pays floating three
month  LIBOR plus 5.50% . The  financial  institution  has the right to call the
agreement,  at its  discretion,  after May 1, 2003.  In  addition,  the  Company
entered into an interest  rate collared swap  agreement  maturing  November 2006
relating to $75.0 million nominal amount of its term debt.  Under the agreement,
the  Company  pays  floating  three  month  LIBOR,  capped  at  6.75%,  plus the
applicable margin as set forth in the credit agreement.  In the event,  however,
the three month LIBOR drops below 2.50% from November 1, 2001 to April 30, 2002,
2.85% from May 1, 2002 to April 30, 2003,  or 4.10% from May 1, 2003 to November
1, 2006, the Company would be required to pay 5.50% plus the applicable  margin,
until such time the three month LIBOR  rises  above the period  floor,  at which
time the rate returns to a variable rate.




<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,
          2000.


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

               None

          (b). Reports on Form 8-K

               There  were no  reports  on Form 8-K  filed  for the  three-month
               period ended September 30, 2001.


<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:   November 14, 2001