I would have a gunsmith check your .38 for frame stretch and estimate the cost for to replace the barrel.
If the frame is good, shoot it a while and see if the accuracy is good.
Keep it and shoot it (as suggested by Sevens) until the barrel does wear out (I suspect you may eventually see signs of premature erosion starting near the bulge, but you may still get thousands of rounds of good shooting before it becomes a problem).
I expect it would be a lot easier to replace the barrel than to get a new gun, yes?
Sorry to learn of the damage.
Lost Sheep
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