diff --git a/src/wallet/wallet.cpp b/src/wallet/wallet.cpp
index 4becb340a9d..9c51fb51a31 100644
--- a/src/wallet/wallet.cpp
+++ b/src/wallet/wallet.cpp
@@ -470,6 +470,8 @@ std::shared_ptr<CWallet> RestoreWallet(WalletContext& context, const fs::path& b
     const fs::path wallet_path = fsbridge::AbsPathJoin(GetWalletDir(), fs::u8path(wallet_name));
     auto wallet_file = wallet_path / "wallet.dat";
     std::shared_ptr<CWallet> wallet;
+    bool wallet_file_copied = false;
+    bool created_parent_dir = false;
 
     try {
         if (!fs::exists(backup_file)) {
@@ -478,13 +480,22 @@ std::shared_ptr<CWallet> RestoreWallet(WalletContext& context, const fs::path& b
             return nullptr;
         }
 
-        if (fs::exists(wallet_path) || !TryCreateDirectories(wallet_path)) {
+        if (fs::exists(wallet_path)) {
             error = Untranslated(strprintf("Failed to create database path '%s'. Database already exists.", fs::PathToString(wallet_path)));
             status = DatabaseStatus::FAILED_ALREADY_EXISTS;
             return nullptr;
+        } else {
+            // The directory doesn't exist, create it
+            if (!TryCreateDirectories(wallet_path)) {
+                error = Untranslated(strprintf("Failed to restore database path '%s'.", fs::PathToString(wallet_path)));
+                status = DatabaseStatus::FAILED_ALREADY_EXISTS;
+                return nullptr;
+            }
+            created_parent_dir = true;
         }
 
         fs::copy_file(backup_file, wallet_file, fs::copy_options::none);
+        wallet_file_copied = true;
 
         if (load_after_restore) {
             wallet = LoadWallet(context, wallet_name, load_on_start, options, status, error, warnings);
@@ -497,7 +508,13 @@ std::shared_ptr<CWallet> RestoreWallet(WalletContext& context, const fs::path& b
 
     // Remove created wallet path only when loading fails
     if (load_after_restore && !wallet) {
-        fs::remove_all(wallet_path);
+        if (wallet_file_copied) fs::remove(wallet_file);
+        // Clean up the parent directory if we created it during restoration.
+        // As we have created it, it must be empty after deleting the wallet file.
+        if (created_parent_dir) {
+            Assume(fs::is_empty(wallet_path));
+            fs::remove(wallet_path);
+        }
     }
 
     return wallet;