You should have access to Rank V+ (Effectively VI) gear at this point. Chapter 1 caps you at Rank III. Chapter 2 caps you at Rank V. Remember that you unlock the next tier by having everyone wearing 3 trinkets of the previous rank+.
You can also load up everyone with 5 Battle Energy once you're using Rank V+ gear to get an effective Rank VII, which should really drop the damage you're taking if you're still having difficulty.
THANK YOU so much for saying how gear unlocks. I couldn't understand why I was getting rinsed in every fight, even though I was leveling up my gear.
I admit this has been frustrating to play, but that is because I have no familiarity with the FF13 style of battles and I have no idea where the game tells you that you NEED to level up your gear to unlock the next tier at the shop. Fingers crossed I can catch up enough to where I don't have to completely restart!
