diff --git a/public/Invoke-DbaDbDecryptObject.ps1 b/public/Invoke-DbaDbDecryptObject.ps1
index 9c34c16ede8..10c7ae76682 100644
--- a/public/Invoke-DbaDbDecryptObject.ps1
+++ b/public/Invoke-DbaDbDecryptObject.ps1
@@ -209,9 +209,12 @@ function Invoke-DbaDbDecryptObject {
         if ($ExportDestination -and -not (Test-Path $ExportDestination)) {
             try {
                 # Create the new destination
-                New-Item -Path $ExportDestination -ItemType Directory -Force | Out-Null
+                New-Item -Path $ExportDestination -ItemType Directory -Force -ErrorAction Stop | Out-Null
             } catch {
-                Stop-Function -Message "Couldn't create destination folder $ExportDestination" -ErrorRecord $_ -Target $instance -Continue
+                # No -Continue here: the begin block has no enclosing loop, so the continue would escape the command
+                # and eat an iteration of whatever loop the caller runs in (#10638). The process block is guarded.
+                Stop-Function -Message "Couldn't create destination folder $ExportDestination" -ErrorRecord $_ -Target $instance
+                return
             }
         }
 
diff --git a/tests/Invoke-DbaDbDecryptObject.Tests.ps1 b/tests/Invoke-DbaDbDecryptObject.Tests.ps1
index 680472f274d..511ed7e03a2 100644
--- a/tests/Invoke-DbaDbDecryptObject.Tests.ps1
+++ b/tests/Invoke-DbaDbDecryptObject.Tests.ps1
@@ -1181,4 +1181,34 @@ Describe $CommandName -Tag IntegrationTests {
             $contextAfter | Should -Be $contextBefore
         }
     }
+
+    Context "When the export destination cannot be created" {
+        BeforeAll {
+            # A destination on a drive that does not exist: New-Item -Force on a folder under a file returns
+            # quietly, a missing drive is what makes it throw on both editions.
+            $freeDriveLetter = [char[]](90..65) | Where-Object { -not (Test-Path -Path "$([char]$PSItem):\") } | Select-Object -First 1
+            $badDestination = "$([char]$freeDriveLetter):\dbatoolsci_nodrive\export"
+        }
+
+        It "Warns without eating an iteration of the caller's loop" {
+            # The folder check used to run Stop-Function -Continue in the begin block, where no loop encloses
+            # it - the continue escaped the command and consumed an iteration of this very loop (#10638). It
+            # also never fired, because the failing New-Item was not a terminating error, so a folder that could
+            # not be created was silently ignored. The check fires before any connection is made.
+            $loopCount = 0
+            foreach ($i in 1..3) {
+                $splatBadFolder = @{
+                    SqlInstance       = $TestConfig.InstanceMulti1
+                    Database          = "dbatoolsci_none"
+                    ObjectName        = "dbatoolsci_none"
+                    ExportDestination = $badDestination
+                    WarningAction     = "SilentlyContinue"
+                }
+                $null = Invoke-DbaDbDecryptObject @splatBadFolder
+                $loopCount++
+            }
+            $loopCount | Should -Be 3
+            ($WarnVar -join " ") | Should -BeLike "*create destination folder $badDestination*"
+        }
+    }
 }