Yvonne Stam, a frequent contributor to this site, heard this gem from her sister, who was referring to children reaching middle school age. It is a congruent conflation of “going to pot” and “going to hell in a handbasket”, both meaning declining or getting worse. As Yvonne says, the speaker was probably confusing the word “handbasket” (surely an antique word) with handbag. She also points out that “to hell in a handbag” is noted in Wikipedia as a common version. This malaphor is similar to one I posted in 2012, “the project is going to pot in a handbasket” (https://malaphors.com/2012/09/15/the-project-is-going-to-pot-in-a-handbasket/) which was uttered in the 70s. Perhaps handbaskets were more common then. Pot was, that’s for sure.
A big thanks to Yvonne Stam for hearing this one and sending it in!