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At her age, and with the symptoms described, individual therapy is best. She will need cognitive behavioral therapy which will seek to decondition and support her to be less afraid and anxious. It will also address the despondency and symptoms of depression that you describe.
Best practice, especially because she is young, is a visit to her pediatrician's office for a physical and a referral to a child behavioral specialist. Group work is fine for some issues, but anxiety tends to respond well to one on one intervention much better.
What to do in the meantime and how to help her now:
She needs to make some gains, even small ones, to boost her confidence and encourage her.
The best way I know to do this is with CBT techniques:
Although this book is written for adults, you can use this resource to help you daughter significantly. The book is based on well researched CBT techniques and is the gold standard for treatment of anxiety in both children and adults. It is the: Anxiety and Phobia Workbook by Edmund Bourne. It is very inexpensive on amazon.com as well as other on-line book sellers. It is easily my favorite workbook on the topic and can easily be converted by you into exercises and simple anxiety reducing practices that your daughter can utilize. It is written in down to earth language and will not cause you any difficulty to bring it to your daughter's developmental level.
Also, anxiety is very physical. In my own children I would encourage this technique as a good starter:
Elevator BreathingBegin by having your children observe the natural inhalation and exhalation of their breath without changing anything, then proceed with the directions.Directions:Your breath is an elevator taking a ride through your body.Breathe in through your nose and start the elevator ride.Breathe out and feel your breath go all the way to the basement, down to your toes.Breathe in and take your elevator breath up to your belly.Hold it. Now, breathe out all your air. (Pause)This time, breathe in and take your elevator breath up to your chest.Hold it. Now breathe out all your air. (Pause)Now breathe in and take your elevator breath up to the top floor, up through your throat and into your face and forehead.Feel your head fill with breath. Hold it.Now breathe out and feel your elevator breath take all your troubles and worries down through your chest, your belly, your legs, and out through the elevator doors in your feet.(Repeat)Day time Follow up: Blow up a real balloon. Show your child how it fills up, from the bottom, the middle and finally the top. Let out some air. Watch the balloon deflate from the top, the middle, and the bottom. Explain that they can inflate and deflate the air of their imaginary balloon (in their bellies and chest) in the same way. Some people like to have the child picture anxiety as the balloon and as they deflate the balloon they picture the anxiety going with the air that escapes. It is simple, but often effective and fun.
There is strong hope here, for at your daughter's age her mental processes are not fully fixed and rooted. This means that she should be able to make strong and lasting gains in a brief time frame. She will do much better. But, the first step is to have her seen for a physical, as there are metabolic issues that can masquerade as anxiety and then, if ruled out...a referral to a specialist in child issues. Steven