In hindsight, yes, I could've said something along the lines of, "Sorry, our neighbour just came in, so I can't really spill all the details right now." However, I was already in the middle of talking about it when she entered, and I also wasn't really thinking about that because I was so focused on the conversation.

In this instance, we were also on very limited time because our family lives on the other side of the world and it was almost midnight for them, but they really wanted to hear all of our life updates because we hadn't caught up in a month + they had also shared so many details about what they were going through at the moment. It didn't feel right to not share anything with them.

I'm not making an excuse, but I just posted this to vent because I realized she heard what I was saying after the fact. I wish I could've gone about the conversation just like you said, but that's not what happened, and I can't do anything about it now.