Kendra Wilkinson and Hank Baskett Reveal the Truth About His Sex Scandal: 'I Brought Pain upon This Family'

It was a shocking headline that caused a national media frenzy. In 2014, news broke that Hank Baskett had an affair with a transgender model while his wife Kendra Wilkinson was eight months pregnant.

Now, one year later, the parents of Hank IV, 5, and Alijah, 13 months, are finally coming clean about what happened on that fateful day — and how they picked up the pieces.

"I messed up," a teary-eyed Baskett tells PEOPLE exclusively. "I put myself in a bad situation. And everything through me brought pain upon this family."

Last April, Baskett says he encountered a couple in a grocery store parking lot smoking marijuana. The former football player, 32, says he approached the couple to buy some pot; they gave him a phone number to call and, when he did, provide an address. Once he showed up at home, Baskett says he used the restroom, and when he emerged, "I saw something I thought I would never see in my life."

Baskett says the person who answered the door, a transgender woman, was nude and making out with another transgender woman. "I froze," says Baskett, visibly shaking as he recalls the memory. Then, the woman who answered the door approached Baskett and fondled him through his basketball shorts.

"I didn't engage in anything," he says. "It was like a bank robbery. You never know when you'll freeze. I don't know if it was a couple of seconds or 15 seconds, because all I was saying was get out, get out, get out."

Baskett says he was so humiliated and distraught by the incident that he initially couldn't open up about the truth to his family or friends, even when news of the encounter broke two months later. "I was this big former football player," he says. "I was the alpha male. I could do anything to protect my family, but I couldn't protect myself."

After the initial media onslaught, just five weeks after Alijah's birth, a blindsided Wilkinson "went ballistic," she says. The Kendra on Top star, 30, kicked Baskett out, flushed her wedding rings down the toilet and threatened divorce. "I couldn't control my emotions."

But when Baskett finally worked up the courage, to be honest, Wilkinson was understanding, even sympathetic. "Hank was very naïve and gullible," she says. "He thinks everybody is his friend. That led him to the hell that we've lived."

As far as headlines calling Baskett a cheater, Wilkinson says, "I don't say the word 'cheat.' I can say he was not loyal to me. I don't care about the act. I care about how he reacted to it and how I was told by the media what happened. That scarred me."

And once Wilkinson learned the truth, she stood by her husband. Even when an audio tape was released, Baskett offered to pay the woman for her silence. "I wouldn't have pissed off that predator either," she says. "I would have said, 'I'll give you the world, please don't ruin my life.'"

Baskett vehemently denies the allegations that claim mutual masturbation took place and that Baskett sought out the woman specifically after he found photos of her online. "It's hard to defend yourself when people are making up lies," he explains his decision to stay quiet initially. "You never know what someone will make up [next]."

Now, after months of therapy, including a stint on WE tv's Marriage Boot Camp: Reality Stars, the couple — married since 2009 — are focused on moving on. "I'm finding the trust again," says Wilkinson. "And I'm very happy Hank went through this now because he's able to teach his son and his daughter what it's like to make a mistake and what you do after making a mistake."

And with the secret finally out, "I have a huge weight lifted off my shoulders," says Baskett. "I feel extremely free."

For more from Kendra and Hank, pick up this week's issue of PEOPLE, on newsstands Friday.