When you file Chapter 13, you're agreeing to make
payments on your debt. As a result, creditors look a little more favorably on the debtor that files Chapter 13 instead of the more drastic Chapter 7. What this means is that there may be an easier time obtaining subsequent credit than had someone discharged all their debt in Chapter 7.
Another benefit of Chapter 13 is that you get to keep your home by agreeing to make your mortgage payments, along with other debts (secured or unsecured).
Are there downsides to Chapter 13? Well, you will be agreeing to make payments, usually over 3 years. You really will need to stick to your payment plan, or else the entire bankruptcy petition will be dismissed, leaving you in the position you started off in, or worse. Good steady income is one factor the bankruptcy trustee is going to be looking at: do you have enough of an income stream where 3 years of monthly payments is realistic for you? If the answer is yes, then Chapter 13 may be the way to go.
Next: The Payment Plan