It appears to be most often spelled kablooie or kablooey (Wiktionary prefers the former, while Google's Ngram and I prefer the latter).
However, I don't know that there's a perfectly standardized spelling. In addition to the aforementioned two, Wiktionary also suggests each with a hyphen (ka-blooey etc.) plus kerblooie and kerplooie, which are presumably preferred by folks whose dialect includes "intrusive R", and at least two others have come up in comments. The only thing they seem to have in common is that they generally begin with a k.
(colloquial) A failure, meltdown; or explosion; a splat or splash.
The bottle of ketchup hit the floor and went kablooie all over everything.
Most frequently used in the phrase to go kablooie or it went kablooie.
Your usage looks spot-on for the definition, assuming you mean that the situation suddenly and dramatically went wrong; I would write it:
All of a sudden, everything went kablooey.
However, if you have a strong preference for another spelling I wouldn't call it wrong.