diff --git a/lnwallet/channel_test.go b/lnwallet/channel_test.go
index 0b98b98c1..80a3df31c 100644
--- a/lnwallet/channel_test.go
+++ b/lnwallet/channel_test.go
@@ -10111,3 +10111,101 @@ func testNewBreachRetribution(t *testing.T, chanType channeldb.ChannelType) {
 	)
 	require.ErrorIs(t, err, channeldb.ErrLogEntryNotFound)
 }
+
+// TestExtractPayDescs asserts that `extractPayDescs` can correctly turn a
+// slice of htlcs into two slices of PaymentDescriptors.
+func TestExtractPayDescs(t *testing.T) {
+	t.Parallel()
+
+	// Create a testing LightningChannel.
+	lnChan, _, err := CreateTestChannels(
+		t, channeldb.SingleFunderTweaklessBit,
+	)
+	require.NoError(t, err)
+
+	// Create two incoming HTLCs.
+	incomings := []channeldb.HTLC{
+		createRandomHTLC(t, true),
+		createRandomHTLC(t, true),
+	}
+
+	// Create two outgoing HTLCs.
+	outgoings := []channeldb.HTLC{
+		createRandomHTLC(t, false),
+		createRandomHTLC(t, false),
+	}
+
+	// Concatenate incomings and outgoings into a single slice.
+	htlcs := []channeldb.HTLC{}
+	htlcs = append(htlcs, incomings...)
+	htlcs = append(htlcs, outgoings...)
+
+	// Run the method under test.
+	//
+	// NOTE: we use nil commitment key rings to avoid checking the htlc
+	// scripts(`genHtlcScript`) as it should be tested independently.
+	incomingPDs, outgoingPDs, err := lnChan.extractPayDescs(
+		0, 0, htlcs, nil, nil, true,
+	)
+	require.NoError(t, err)
+
+	// Assert the incoming PaymentDescriptors are matched.
+	for i, pd := range incomingPDs {
+		htlc := incomings[i]
+		assertPayDescMatchHTLC(t, pd, htlc)
+	}
+
+	// Assert the outgoing PaymentDescriptors are matched.
+	for i, pd := range outgoingPDs {
+		htlc := outgoings[i]
+		assertPayDescMatchHTLC(t, pd, htlc)
+	}
+}
+
+// assertPayDescMatchHTLC compares a PaymentDescriptor to a channeldb.HTLC and
+// asserts that the fields are matched.
+func assertPayDescMatchHTLC(t *testing.T, pd PaymentDescriptor,
+	htlc channeldb.HTLC) {
+
+	require := require.New(t)
+
+	require.EqualValues(htlc.RHash, pd.RHash, "RHash")
+	require.Equal(htlc.RefundTimeout, pd.Timeout, "Timeout")
+	require.Equal(htlc.Amt, pd.Amount, "Amount")
+	require.Equal(htlc.HtlcIndex, pd.HtlcIndex, "HtlcIndex")
+	require.Equal(htlc.LogIndex, pd.LogIndex, "LogIndex")
+	require.EqualValues(htlc.OnionBlob[:], pd.OnionBlob, "OnionBlob")
+}
+
+// createRandomHTLC creates an HTLC that has random value in every field except
+// the `Incoming`.
+func createRandomHTLC(t *testing.T, incoming bool) channeldb.HTLC {
+	var onionBlob [lnwire.OnionPacketSize]byte
+	_, err := rand.Read(onionBlob[:])
+	require.NoError(t, err)
+
+	var rHash [lntypes.HashSize]byte
+	_, err = rand.Read(rHash[:])
+	require.NoError(t, err)
+
+	sig := make([]byte, 64)
+	_, err = rand.Read(sig)
+	require.NoError(t, err)
+
+	extra := make([]byte, 1000)
+	_, err = rand.Read(extra)
+	require.NoError(t, err)
+
+	return channeldb.HTLC{
+		Signature:     sig,
+		RHash:         rHash,
+		Amt:           lnwire.MilliSatoshi(rand.Uint64()),
+		RefundTimeout: rand.Uint32(),
+		OutputIndex:   rand.Int31n(1000),
+		Incoming:      incoming,
+		OnionBlob:     onionBlob,
+		HtlcIndex:     rand.Uint64(),
+		LogIndex:      rand.Uint64(),
+		ExtraData:     extra,
+	}
+}