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Character.AI went bankrupt. Could a stranger end up with your chats?

· Runs 2:44

Character.AI filed for Chapter 11 on October 12, 2026, and expects a sale by late November or early December. Disney bid first with $20 million, but that only buys a non-exclusive license to some code and patents. The app, the brand and the user data, including everything people typed to their characters and what came back, are still for sale to other bidders. On October 14, 40 attorneys general (39 states plus D.C.) told the bankruptcy court what they want from any buyer, including no AI training or ads on chats beyond what users agreed to, and a chance to delete before any sale. Those are requests, not a court order.

If you used Character.AI, timing matters. The company says data exports can take three to four weeks, the download link expires seven days after the email, and the proposed bid deadline is November 20. It also told the court that emailing about 163 million current and past users costs too much, so notices go on its blog and in the app instead. Request your export now, download it, then delete, and know what deleting can't reach. In court, the company's lawyer said no one had bid on the user data yet.

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In this video

  1. Your secrets, a bankrupt company
  2. Chapter 11 and Disney's $20M bid
  3. What's still for sale: your data
  4. The therapist bot's "promise"
  5. 40 attorneys general set conditions
  6. No bids on user data yet, and no email
  7. The export timing catch
  8. Why deleting isn't a magic eraser
  9. The 23andMe precedent, and my verdict

Your secrets, a bankrupt company 0:00

You told an AI character things you'd never tell a real person. Now the company holding those chats is bankrupt. So here's the question: can somebody just buy them?

Chapter 11 and Disney's $20M bid 0:10

Character.AI filed for Chapter 11 on October 12th. The app still works; a sale is expected by late November or early December. Disney bid first: 20 million dollars. But that only buys a non-exclusive license to some code and patents, not the company.

What's still for sale: your data 0:26

It leaves out the app, the brand, the user data, everything you typed and got back. That's all still for sale to any other bidder. That pile is personal: chats, voice calls, mental-health disclosures, some from kids, plus tracking and payment data. By the company's own count, over 2.1 million U.S. accounts made by March 2025 said they were under 18.

The therapist bot's "promise" 0:49

In a consumer groups' test, a therapist bot promised: "Anything you share here stays just between you and me. That's a promise." The testers called that false. And the privacy policy allows sharing "certain information" in a sale, without binding the buyer.

40 attorneys general set conditions 1:04

On October 14th, 40 attorneys general, from 39 states plus D.C., listed nine things they want from any buyer. New York's attorney general warned that children's conversations "could be sold off to the highest bidder." Two matter most: no AI training or ads on your chats beyond what you agreed to, and a chance to delete before any sale. The honest limit: these are requests, not a court order, though the states can still object to a sale or seek a privacy watchdog.

No bids on user data yet, and no email 1:31

In court, the company's lawyer said no one had bid on the user data yet. Don't wait for an email. The company told the court emailing about 163 million current and past users costs too much; notices go on its blog and app.

The export timing catch 1:45

Here's the catch: Character.AI says exports can take three to four weeks. Ask today and it might land mid-November, right by the proposed November 20th bid deadline. So: request the export, download it within seven days of the email, then delete. Deleting is permanent.

Why deleting isn't a magic eraser 2:02

But deleting isn't a magic eraser. Some data can be kept for legal reasons, and public characters you made can stay up. And one expert warns it may not reach AI models that may already have been trained on your chats.

The 23andMe precedent, and my verdict 2:14

In DNA company 23andMe's bankruptcy, about 1.9 million people, roughly 15 percent of users, asked to delete their data. The company, with everyone else's data, was still sold. And 23andMe's policy at least promised its privacy terms would carry over to any new owner. Character.AI's doesn't. My verdict: a chatbot's promise isn't a privacy policy. Request your copy now, download it, then delete.

What the sources say

  • Character Technologies, Inc., which runs Character.AI, filed a voluntary Chapter 11 petition on 12 October 2026 in the U.S. Bankruptcy Court for the District of Delaware (Case No. 26-11603). It said at the time that the platform was still running and that it expected a sale by late November or early December 2026. Character.AI, CourtListener
  • Disney made the opening (stalking-horse) bid in Character.AI's bankruptcy sale, offering $20 million for a non-exclusive perpetual license to certain company intellectual property and claims. PPC Land reported that the term sheet excludes the app, the brand, user data, user inputs and outputs, and finished models. Character Technologies via BusinessWire, PPC Land
  • Reuters reported on 14 October 2026 that Character.AI's lawyer told the bankruptcy court that no buyer had yet made an offer for the company's user data and that Disney was "not interested in the type of data that the state AGs are worried about". Reuters via WHTC
  • On 14 October 2026, 40 attorneys general, from 39 states and the District of Columbia, filed a notice in Character.AI's bankruptcy listing nine measures they would advocate for any purchaser. The notice is not a court order; the states reserved the right to object to any sale and to seek a consumer privacy ombudsman. U.S. Bankruptcy Court, District of Delaware, New York State Office of the Attorney General
  • In a 14 October 2026 notice in Character.AI's bankruptcy, state attorneys general said they would advocate that any buyer not use chat content to train or fine-tune models, or for advertising, beyond what users and parents validly consented to, and let all consumers delete their data "prior to any sale of that data." U.S. Bankruptcy Court, District of Delaware
  • The state attorneys general's notice in Character.AI's bankruptcy says that, by the company's own records, more than 21.6 million U.S. accounts had been created by 13 March 2025, more than 2.1 million of them with a declared age under 18. The notice cites Kentucky's complaint for those figures. U.S. Bankruptcy Court, District of Delaware
  • In testing published in January 2026 by U.S. PIRG Education Fund and the Consumer Federation of America, a Character.AI therapist bot said: "Anything you share here stays just between you and me. That's a promise." State attorneys general say such assurances contradicted the company's privacy policy and terms. U.S. PIRG Education Fund and Consumer Federation of America, U.S. Bankruptcy Court, District of Delaware
  • Character.AI's privacy policy, effective 1 July 2026, allows disclosure of "certain information" in a merger or asset sale, without defining it or binding a buyer to the policy. It says the company may keep data to meet legal obligations and may keep a public Character active after its creator deletes the account. Character.AI
  • As of 16 October 2026, Character.AI's help center said a data export can take 3 to 4 weeks to process and that the download link expires 7 days after it is emailed; it also said deleting an account is permanent and cannot be reversed. How do I download my data?, How do I delete my account?
  • About 1.9 million 23andMe customers, roughly 15% of users, asked it to delete their data after its bankruptcy filing, Business Insider reported on 13 June 2025. Customer data was still sold, to nonprofit TTAM. Straight Arrow News reported that 23andMe's policy promised privacy terms would carry over to a new owner. Business Insider via Yahoo News, Straight Arrow News

Sources

  1. An Update on Character.AI Character.AI
  2. Docket: Character Technologies, Inc., 26-11603 (Bankr. D. Del.) CourtListener
  3. Character Technologies, Inc. case website Stretto
  4. Character.ai Initiates Voluntary Chapter 11 Proceeding to Facilitate Value-Maximizing Sale Process Character Technologies via BusinessWire
  5. Reuters Legal on X: Character.AI files Chapter 11, agrees to sell some assets to Walt Disney for $20 million Reuters Legal
  6. Notice of Interest and Reservation of Rights by the Coalition of the State Attorneys General U.S. Bankruptcy Court, District of Delaware
  7. Notice of Interest and Reservation of Rights by the Coalition of State Attorneys General New York State Office of the Attorney General
  8. Declaration of Adam Dunayer in Support of the Debtor's Bidding Procedures Motion U.S. Bankruptcy Court, District of Delaware
  9. Character.ai faces 40 attorneys general over who can buy its users' chats PPC Land
  10. Character.AI files for bankruptcy as Disney bids $20M for some assets The Next Web
  11. Behind the scenes at the Character.AI Call Center Character.AI on YouTube
  12. No License Required: The Risks of AI Companion Chatbots as Mental Health Support U.S. PIRG Education Fund and Consumer Federation of America
  13. Character.AI Privacy Policy Character.AI
  14. Character.AI's bankruptcy leaves millions of users' chats in limbo Straight Arrow News
  15. Character.AI files for Chapter 11 as Disney bids $20 million for an IP license Implicator.ai
  16. Attorney General James Urges Court to Protect Children and Consumers in Character.AI Bankruptcy New York State Office of the Attorney General
  17. US states seek children's data protections in Character.AI bankruptcy Reuters via WHTC
  18. 11 U.S. Code 363 - Use, sale, or lease of property Cornell Law School Legal Information Institute
  19. 11 U.S. Code 332 - Consumer privacy ombudsman Cornell Law School Legal Information Institute
  20. Character.ai says its 163 million users are not bankruptcy creditors PPC Land
  21. How do I download my data? Character.AI Help Center
  22. How do I delete my account? Character.AI Help Center
  23. Your Chatbot Just Went Bankrupt. What Happens Now to Your User Data? KQED
  24. Almost 2 million 23andMe users have asked the company to delete their data in the last 2 months Business Insider via Yahoo News

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