Last updated October 15, 2026. This story is still moving, and I will update this page when the court does.
Character.AI filed for Chapter 11 bankruptcy and is selling itself under court supervision. If your child ever had an account, their chats are still on the company's servers, and nobody can yet say who will end up holding them. The safe move this week is to look at the account together, export what matters, then delete it. The company says deletion is permanent, so look first.
If you are reading this because your child has talked to a chatbot about hurting themselves, do not wait for a court date. Talk to a person today: your child's doctor or pediatrician, the school's safeguarding lead, or a helpline (988 in the US; Samaritans on 116 123 or Childline on 0800 1111 in the UK). A chatbot is not a clinician, and neither is a blog post.
What happened with Character.AI this week?
On October 12, 2026, the company announced on its own blog that it "has initiated a voluntary Chapter 11 bankruptcy process to facilitate a court-supervised sale of the company." The app stays up for now. If no bid keeps it running, it will be wound down, and the company expects the sale to finish in late November or early December. It also says its privacy and security practices are unchanged and that users can delete their accounts or export their data.
Press coverage says Disney has agreed to a $20 million opening bid, which The Next Web reports is for a license to some of the company's intellectual property and certain legal claims. Other bidders can offer more. Nothing I read says user data is part of that deal.
Two days later, on October 14, 2026, 40 state attorneys general filed a notice in the bankruptcy case. New York's press release says they want any buyer to use age verification that goes beyond self-disclosure, to limit the use of private conversations for AI training or other commercial purposes without valid consent, and to give consumers a chance to access and delete their information before any sale. It cites more than 20 million monthly users and more than 2 million accounts registered by people who said they were under 18. Vermont's release says the states worry that the company's voluntary limits on minors "are not compulsory, are incomplete, and could be circumvented or reversed by a future purchaser." Massachusetts adds that the states have reserved the right to challenge any proposed sale.
Will my child's chats be sold?
Nobody knows yet. Here is what the rules say, and then what I make of it.
The evidence: US bankruptcy law has a specific rule for this. Section 363(b)(1) says that when a company's own privacy policy prohibits transferring personal information, a sale of it must either be consistent with that policy or happen after the court appoints a consumer privacy ombudsman and holds a hearing. Section 332 says the ombudsman gives the court information on the privacy policy and the possible gains and losses to consumers. Character.AI's privacy policy page, updated October 29, 2025, says "We do not sell your personal information." The page I read does not say what happens to data in a bankruptcy sale. I am not a lawyer, and whether that sentence limits a sale is a question for the court.
My interpretation: there is a process, the states are watching it, and the company says it expects a sale in about six weeks. That is enough time to act, and not enough reason to wait and see.
What should I do about it this week?
Here is the rule I would use, in words you can keep.
The Look First Rule: before you delete a child's chat account, look first. Sit with your child, read what is there together, and export it. Deletion is permanent, and it takes with it the only record you could show a doctor, a school or a regulator.
My suggestion, in order:
- Find out whether there is an account. Ask, and check the email inbox your child uses for a sign-up or welcome message. Uninstalling the app does nothing to the account behind it.
- Look together. Open it with your child beside you, not over their shoulder.
- Export what matters. Character.AI's export help page says to go to your profile, then Profile Settings, Account, Manage Account & Data, then Export data. It was last updated July 10, 2025, so the menu names may have changed, and it does not say what the export includes.
- Delete the account. The deletion help page says deletion "is permanent and cannot be reversed." It was last updated October 3, 2024, and it does not say how long copies are kept afterward.
- Ask in writing. In the UK, the Information Commissioner's Office says you can ask an organization to erase data, including data collected from you as a child, and it has one calendar month to respond. In the US, deletion rights depend on your state, so check your attorney general's website.
Which situation is your child in?
| Your child's situation | What I would do |
|---|---|
| Never had an account | Nothing. Check the inbox once to be sure. |
| Used it a while ago and stopped | Look together, export, delete. |
| Still uses it, on an adult birthday or a workaround | Talk first, then look, export and delete. The bigger question is what the chats gave them. |
| The chats contain something worrying | Keep the export, and talk to a doctor or the school safeguarding lead before you delete anything. Deleting does not make the worry go away. |
| Upset about losing a character | Treat it as a loss, not a rule-break. Ask what they will miss. |
What I Would Do at Home
I would not make this a raid. The pattern I see most often when parents hear a headline like this is that they open the app on the child's phone and read for an hour, and the child learns only that the phone is not theirs. The better move is boring: pick a calm moment, say what is in the news, and ask them to show you.
You could say: "There's news that the company behind Character.AI is being sold, and nobody knows what happens to old chats. I'm not in trouble-hunting mode. Can we look at your account together and decide what to keep?"
By age:
- Under 8: There should be no account. If you find one, close it and tell the child it was a grown-up's job to catch, not theirs.
- 8 to 12: Any account is on a made-up birthday. Fix it together, export, delete. Let them choose which of their characters to say goodbye to.
- 13 to 15: The company began removing open-ended chat for under-18s in the US on November 24, 2025, with other markets to follow. A teen who is still chatting is likely on an adult birthday, which is my reading, not the company's statement. Start with "What did you like about it?" before "Why did you lie?"
- 16 to 18: Treat it as their decision with your support. "Do you want a copy before it goes? Do you know where else that kind of chat happens now?"
A company going bankrupt does not end your child's data. It starts a process where a court, not you, decides what happens to it.
If the chats show your child leaned on a character for comfort, this post on teens who talk to AI about feelings is the next one to read. The wider picture of the app is in is Character.AI safe for kids, and what ChatGPT collects about your child covers the same question for a different tool.
What to Ask the School
This story is a small version of a question every school should be able to answer: what happens to my child's data if a tool the school uses is sold or closes? Ask:
- Which AI tools do students use at school, and what do the contracts say happens to student data if the vendor is sold or goes out of business?
- Can you delete a student's data from a tool on request, and who does it?
- Does the school's AI policy cover the apps students use at home and on their phones, or only the ones the school bought?
If your child's school has not yet spoken to parents about AI and student data, that gap is worth raising with the head of year. It is the planning work I do with schools through my AI readiness work for schools, and the page is worth forwarding to them.
What None of This Can Guarantee
An export may not include everything. A deletion button cannot prove copies are gone, and only the company can confirm it. The court may order something different from what the states asked for. A child can open a new account somewhere else in about two minutes. And nothing here overrides your school's rules, a platform's age limits, or the advice of a doctor or safeguarding lead if you are worried about your child rather than a setting.
What to Watch Next
The sale is expected in late November or early December. Watch for a buyer being named, for a consumer privacy ombudsman being appointed, and for what any buyer commits to on children's data. California has already written chatbot duties into law, and what its new chatbot laws change for your family is worth a read while the federal picture stays thin.
I write a weekly newsletter that keeps teachers and parents up to date on stories like this without the panic. Parents are very welcome.
Dan Fitzpatrick is a former secondary teacher, assistant headteacher and Director of Digital Strategy who now trains schools on AI. More about Dan.
