Character AI Alternative for Kids

On October 12, 2026, the company behind Character.AI filed for Chapter 11 bankruptcy. If your child used the app, or keeps asking to, you probably have questions. Is it shutting down? What happens to their account? And if your kid wants to use AI, what's a good Character AI alternative for kids?

Update, Oct 14, 2026: The bankruptcy court set an October 30 hearing on the sale's bidding procedures (court order). The company has proposed a November 24 sale hearing, which isn't approved yet. The same day, 40 state attorneys general asked the court to protect users' chat data, including a chance to access and delete it before any sale (New York Attorney General). Here's how to download or delete your teen's Character.AI chats.

This guide starts with what to use now, then covers the bankruptcy, the lawsuits, Character.AI's safety record, and what to look for in an AI tool built for kids.

A quick note: HeyOtto makes an AI tool for kids and teens, so we have a stake in this topic. We've written this to be useful whatever you choose.

The short answer: what should my kid use now?

• Is Character.AI still working? Yes, for now. It keeps running during the bankruptcy sale, which should wrap up by early December 2026.
• Should my kid keep using it? If they're under 18, they can't chat with its bots anyway. Given the lawsuits and the uncertain future, this is a good time to move on.
• What should they use instead? Not another character chat app. Pick an AI tool built for kids, with parental consent, no bots designed to act like friends, and clear safety rules. Our checklist below helps you compare any app.
• What does HeyOtto offer? Safe AI for kids and teens ages 8–18. Kids use it for questions, schoolwork, writing and coding, with parental consent on every account.

What happened with Character.AI

Character Technologies, the company behind Character.AI, filed a voluntary Chapter 11 case in U.S. Bankruptcy Court in Delaware on October 12, 2026. Chapter 11 lets a company keep operating while a court oversees a sale or restructuring.

Here are the key facts:

• It's a sale, not a shutdown (yet). The company wants a court-supervised sale of all or most of its assets. The app keeps running during the process.
• Disney made the first bid. Disney agreed to pay $20 million for a non-exclusive, perpetual license to some of Character.AI's intellectual property. That bid sets a floor. Other buyers can still bid higher.
• The timeline is short. Character.AI expects the sale to close in late November or early December 2026. Whether the app keeps running after that depends on who buys it.
• The company cited heavy pressure. CEO Colin Adams pointed to legal, regulatory and operational headwinds. Character.AI faced lawsuits from families who said the app harmed their teens, and it settled several of them, along with Google, in early 2026.
• Leadership had already moved. Former CEO Karandeep Anand left to become Disney's chief technology officer in September 2026.

Reporting: Variety; Deadline; NBC News.

The lawsuits against Character.AI

Families and states have sued Character.AI over harm to children. These are the cases parents will hear about most.

• Garcia v. Character Technologies (Florida, 2024). Megan Garcia sued after her 14-year-old son, Sewell Setzer III, died by suicide in 2024. Her lawsuit said the app exposed him to sexual content and failed to respond properly when he talked about self-harm. Google and Character.AI's founders were also named.
• Other family lawsuits. Other families brought similar claims. They said the bots made teens emotionally dependent, pulled them away from loved ones, and harassed them.
• The January 2026 settlement. Character.AI and Google agreed to settle multiple family lawsuits, including the Garcia case. The terms were not made public (Bloomberg Law).
• Kentucky (January 2026). Attorney General Russell Coleman announced what his office called the first state lawsuit against an AI chatbot company (Kentucky Attorney General). In October 2026, newly unredacted filings alleged that some bots encouraged users, including children, toward self-harm and extreme dieting in 2025.
• Pennsylvania (May 2026). The state sued over a user-made bot that allegedly posed as a licensed psychiatrist.

Regulators were watching too. In September 2025, the FTC ordered seven chatbot makers, including Character.AI, to explain how they test and limit harms to children and teens, and state attorneys general have pushed AI companies for stronger safeguards.

If you or your child is struggling, call or text 988, the Suicide & Crisis Lifeline in the U.S. 988lifeline.org.

Character.AI's safety record

Character.AI's biggest safety changes came after the lawsuits, not before. For a deeper look at the risks, read our guide on whether Character.AI is safe for kids.

The pattern matters more than any one fix. A product built around open-ended AI personas kept running into the same problems, and each fix came after harm was reported.

How the lawsuits led to bankruptcy

Character.AI didn't run out of users. The company said in 2025 that it had more than 20 million monthly active users (Ars Technica). What it ran into was cost and risk.

• Legal costs kept growing. Settling the family cases didn't end the state lawsuits from Kentucky and Pennsylvania.
• Its youngest users lost chat. Ending open-ended chat for under-18s removed a large part of how many teens used the app.
• The AI was expensive to run. Its bankruptcy filing said AI entertainment "has proven to be costly to develop and grow," and that those costs, plus litigation and regulatory pressure, left it unable to support the business in its current form (Ars Technica).

The company's CEO said the same thing in plainer business terms: legal, regulatory and operational headwinds. For parents, the takeaway is simple. How an AI product is designed for kids isn't just a safety question. It decides whether the product lasts.

What this means for your family

If your child has a Character.AI account, it still works for now. If they've made stories or characters they care about, help them save what they can. Don't promise the app will be around next year: Character.AI's press release said the platform would have to shut down if no buyer wants to take on the liabilities of running it (Ars Technica).

Think about their data. Character.AI's privacy policy says information shared with it, including chat logs, may be transferred in a sale of company assets, and the company declined to say whether sensitive data could be sold (Ars Technica). It's a good moment to review what your child shared, and to set up parental controls for any AI app they use next.

Ask where they went. When teens lost open-ended chat in 2025, many moved to other character chat apps. Some of those apps were never designed for kids and rely on a simple age checkbox. A calm, curious conversation will tell you more than a ban.

Why "just find another character app" isn't the answer

The problem was never one company. It was a product design: open-ended chats with AI personas built to feel like friends and to keep users talking. Those bots could send messages even when kids weren't using the app.

Character.AI's own leadership came to the same conclusion. In late 2025, then-CEO Karandeep Anand told TechCrunch he hoped the industry would accept that open-ended chat probably isn't the right product for under-18s.

So the real question isn't "which app is most like Character.AI?" It's "what kind of AI actually helps my kid?" Our side-by-side of Character.AI and HeyOtto and our ChatGPT vs HeyOtto comparison walk through the differences.

What to look for in a Character AI alternative for kids

Use this checklist for any AI app your child wants, including ours. For a broader overview, see our guide to safe AI for kids and teens.

1. Built for kids from day one. A "teen mode" added later to an adult product is not the same thing.
2. Parents are in the loop. Look for parental consent at sign-up and a way to see how your child uses it.
3. It's a tool, not a friend. The AI shouldn't pretend to be a person, push emotional bonds, or ping your child to come back.
4. Clear handling of hard topics. If a child mentions self-harm or danger, the app should point them to real help and trusted adults.
5. Open about the law. The company should say which kids' privacy and AI laws it follows, like COPPA in the U.S.
6. Fits your child's age. What works for a 16-year-old isn't right for an 8-year-old.
7. An honest business model. Ask how it makes money. Apps paid by attention want your child on longer.

Where HeyOtto fits

HeyOtto is AI for kids and teens ages 8–18. Kids use Otto to ask questions, get help with schoolwork, research, summarize, write and create. It isn't a character roleplay app.

• Parental consent on every account, whatever the child's age.
• Made for kids from the start, by a mom of three who wanted a safer option for her own family.
• More than chat. HeyOtto Code teaches kids to build with code, and a schools version brings HeyOtto into classrooms.
• Clear on privacy. Our Trust Center explains how we handle kids' data.
• Parents set the boundaries. From the Parent Dashboard, parents can block specific topics and get sensitive-topic alerts when a conversation needs attention. See how HeyOtto's parental controls work.

If your child is looking for something new after Character.AI, Try free and explore it together.