Character.ai user data bankruptcy has no final answer yet. The company says its chatbot service remains online, its existing privacy and security practices have not changed, and users can export their data or delete their accounts. But Character.ai is pursuing a court-supervised Chapter 11 sale, and the eventual handling of chats and other personal information has not been decided in the public record.
That uncertainty matters because the service holds more than the usual app profile. A notice filed by state attorneys general says Character.ai collects and analyzes chat content, declared and inferred ages, emotional and health-related disclosures, and patterns of use. The filing says the company uses that information for purposes including personalization, analytics, age assurance, monetization, and improving its product.
What happens to Character.ai chats and user data?
For now, the answer is that the platform is still operating. Character.ai said users can continue to use its services, paid subscriptions remain active, and billing is unchanged at present. The company also said its privacy policy and data-security practices remain in force during the case.
That is the company’s assurance, not a court ruling on where the data will end up. Character.ai said it expects the sale process to conclude by the end of November or in early December 2026. It hopes a buyer will present a proposal that keeps the platform running; if that does not happen, the company says it will wind the service down.
Disney has agreed to act as the stalking-horse bidder, setting the opening terms for competing offers, for a $20 million license to certain Character.ai intellectual property, according to CNBC. The disclosed arrangement also includes transition services from former Character.ai employees hired by Disney. The available information does not establish that Disney will acquire, receive, or use users’ chat histories.
What are state attorneys general seeking?
On October 14, a bipartisan group of 40 attorneys general filed a notice of interest in Character Technologies’ Delaware bankruptcy case. They said privacy and child-safety issues must be addressed in any sale or transfer of the business or its assets.
The coalition cited the sensitivity of users’ conversations and the platform’s use by minors. Its filing says more than 21.6 million U.S. accounts had been created by March 2025, including more than 2.1 million with a declared age under 18, based on company records cited in the notice.
The attorneys general said their investigations identified potential consumer-protection and privacy-law violations involving the company’s safety practices, representations to users, and treatment of personal data. Those are regulators’ allegations and positions, not findings established by the bankruptcy case. The states reserved the right to object to a proposed sale or bankruptcy plan and to seek further protections for consumer information.
What can users do now?
- Export data through the Character.ai app or website, as the company says is currently available.
- Delete an account through the app or website if that is the preferred option.
- Do not assume that a sale, transfer, deletion, or shutdown outcome for old chats has been determined. The process is still underway.
Exporting or deleting an account is the practical action Character.ai has identified for users today. Whether the sale proceeds, who ultimately buys assets, and what safeguards govern sensitive user information remain matters for the Chapter 11 process and the regulators participating in it.
This story draws on original reporting from The Verge.
