diff --git a/test/functional/wallet_migration.py b/test/functional/wallet_migration.py
index e90c48fa6b..3738376158 100755
--- a/test/functional/wallet_migration.py
+++ b/test/functional/wallet_migration.py
@@ -130,53 +130,67 @@ class WalletMigrationTest(BitcoinTestFramework):
             if w["name"] == wallet_name:
                 assert_equal(w["warnings"], ["This wallet is a legacy wallet and will need to be migrated with migratewallet before it can be loaded"])
 
-        # migratewallet uses current time in naming the backup file, set a mock time
-        # to check that this works correctly.
-        mocked_time = int(time.time())
-        self.master_node.setmocktime(mocked_time)
-        # Migrate, checking that rescan does not occur
-        with self.master_node.assert_debug_log(expected_msgs=[], unexpected_msgs=["Rescanning"]):
-            migrate_info = self.master_node.migratewallet(wallet_name=wallet_name, **kwargs)
-        self.master_node.setmocktime(0)
-        # Update wallet name in case the initial wallet was completely migrated to a watch-only wallet
-        # (in which case the wallet name would be suffixed by the 'watchonly' term)
-        migrated_wallet_name = migrate_info['wallet_name']
-        wallet = self.master_node.get_wallet_rpc(migrated_wallet_name)
-        wallet_info = wallet.getwalletinfo()
-        assert_equal(wallet_info["descriptors"], True)
-        self.assert_is_sqlite(migrated_wallet_name)
-        # Always verify the backup path exist after migration
-        assert os.path.exists(migrate_info['backup_path'])
-        if wallet_name == "":
-            backup_prefix = "default_wallet"
-        else:
-            backup_prefix = os.path.basename(os.path.realpath(self.old_node.wallets_path / wallet_name))
-
-        backup_filename = f"{backup_prefix}_{mocked_time}.legacy.bak"
-        expected_backup_path = self.master_node.wallets_path / backup_filename
-        assert_equal(str(expected_backup_path), migrate_info['backup_path'])
-        assert {"name": backup_filename} not in self.master_node.listwalletdir()["wallets"]
-
-        # Open the wallet with sqlite and verify that the wallet has the last hardened cache flag
-        # set and the last hardened cache entries
-        def check_last_hardened(conn):
-            flags_rec = conn.execute(f"SELECT value FROM main WHERE key = x'{ser_string(b'flags').hex()}'").fetchone()
-            flags = int.from_bytes(flags_rec[0], byteorder="little")
-
-            # All wallets should have the upgrade flag set
-            assert_equal(bool(flags & (1 << 2)), True)
-
-            # Fetch all records with the walletdescriptorlhcache prefix
-            # if the wallet has private keys and is not blank
-            if wallet_info["private_keys_enabled"] and not wallet_info["blank"]:
-                lh_cache_recs = conn.execute(f"SELECT value FROM main where key >= x'{ser_string(b'walletdescriptorlhcache').hex()}' AND key < x'{ser_string(b'walletdescriptorlhcachf').hex()}'").fetchall()
-                assert_greater_than(len(lh_cache_recs), 0)
-
-        inspect_path = os.path.join(self.options.tmpdir, os.path.basename(f"{migrated_wallet_name}_inspect.dat"))
-        wallet.backupwallet(inspect_path)
-        self.inspect_sqlite_db(inspect_path, check_last_hardened)
-
-        return migrate_info, wallet
+        migrate_info = {}
+        try:
+            # migratewallet uses current time in naming the backup file, set a mock time
+            # to check that this works correctly.
+            mocked_time = int(time.time())
+            self.master_node.setmocktime(mocked_time)
+            # Migrate, checking that rescan does not occur
+            with self.master_node.assert_debug_log(expected_msgs=[], unexpected_msgs=["Rescanning"]):
+                migrate_info = self.master_node.migratewallet(wallet_name=wallet_name, **kwargs)
+
+            # Update wallet name in case the initial wallet was completely migrated to a watch-only wallet
+            # (in which case the wallet name would be suffixed by the 'watchonly' term)
+            migrated_wallet_name = migrate_info['wallet_name']
+            wallet = self.master_node.get_wallet_rpc(migrated_wallet_name)
+            wallet_info = wallet.getwalletinfo()
+            assert_equal(wallet_info["descriptors"], True)
+            self.assert_is_sqlite(migrated_wallet_name)
+
+            # Open the wallet with sqlite and verify that the wallet has the last hardened cache flag
+            # set and the last hardened cache entries
+            def check_last_hardened(conn):
+                flags_rec = conn.execute(f"SELECT value FROM main WHERE key = x'{ser_string(b'flags').hex()}'").fetchone()
+                flags = int.from_bytes(flags_rec[0], byteorder="little")
+
+                # All wallets should have the upgrade flag set
+                assert_equal(bool(flags & (1 << 2)), True)
+
+                # Fetch all records with the walletdescriptorlhcache prefix
+                # if the wallet has private keys and is not blank
+                if wallet_info["private_keys_enabled"] and not wallet_info["blank"]:
+                    lh_cache_recs = conn.execute(f"SELECT value FROM main where key >= x'{ser_string(b'walletdescriptorlhcache').hex()}' AND key < x'{ser_string(b'walletdescriptorlhcachf').hex()}'").fetchall()
+                    assert_greater_than(len(lh_cache_recs), 0)
+
+            inspect_path = os.path.join(self.options.tmpdir, os.path.basename(f"{migrated_wallet_name}_inspect.dat"))
+            wallet.backupwallet(inspect_path)
+            self.inspect_sqlite_db(inspect_path, check_last_hardened)
+            return migrate_info, wallet
+
+        except Exception as e:
+            # Verify the original legacy wallet was restored in case of error
+            assert (self.master_node.wallets_path / wallet_name / "wallet.dat").exists()
+            # And verify it is still a BDB wallet
+            self.assert_is_bdb(wallet_name)
+            raise e
+
+        finally:
+            self.master_node.setmocktime(0)
+
+            # Always verify the backup path exists after migration, even in failure cases
+            if wallet_name == "":
+                backup_prefix = "default_wallet"
+            else:
+                backup_prefix = os.path.basename(os.path.realpath(self.old_node.wallets_path / wallet_name))
+
+            backup_filename = f"{backup_prefix}_{mocked_time}.legacy.bak"
+            assert self.master_node.wallets_path.exists() # Verify the /wallets/ path exists
+            assert {"name": backup_filename} not in self.master_node.listwalletdir()["wallets"]
+            if migrate_info:
+                expected_backup_path = self.master_node.wallets_path / backup_filename
+                assert_equal(str(expected_backup_path), migrate_info['backup_path'])
+                assert os.path.exists(migrate_info['backup_path'])
 
     def test_basic(self):
         default = self.master_node.get_wallet_rpc(self.default_wallet_name)
@@ -543,7 +557,7 @@ class WalletMigrationTest(BitcoinTestFramework):
         assert_raises_rpc_error(-4, "Error: Wallet decryption failed, the wallet passphrase was not provided or was incorrect", self.migrate_and_get_rpc, "encrypted")
 
         # Use the RPC directly on the master node for the rest of these checks
-        self.master_node.bumpmocktime(1) # Prevents filename duplication on wallet backups which is a problem on Windows
+        self.master_node.setmocktime(int(time.time()))
         assert_raises_rpc_error(-4, "Error: Wallet decryption failed, the wallet passphrase was not provided or was incorrect", self.master_node.migratewallet, "encrypted", "badpass")
 
         self.master_node.bumpmocktime(1) # Prevents filename duplication on wallet backups which is a problem on Windows
@@ -660,13 +674,18 @@ class WalletMigrationTest(BitcoinTestFramework):
 
         assert_equal(bals, wallet.getbalances())
 
-    def clear_default_wallet(self, backup_file):
+    def clear_default_wallet(self, backup_file=None):
         # Test cleanup: Clear unnamed default wallet for subsequent tests
         (self.old_node.wallets_path / "wallet.dat").unlink()
         (self.master_node.wallets_path / "wallet.dat").unlink(missing_ok=True)
         shutil.rmtree(self.master_node.wallets_path / "default_wallet_watchonly", ignore_errors=True)
         shutil.rmtree(self.master_node.wallets_path / "default_wallet_solvables", ignore_errors=True)
-        backup_file.unlink()
+        if backup_file:
+            backup_file.unlink()
+        else:
+            # Delete all legacy backup files in the directory if file not passed
+            for file_path in self.master_node.wallets_path.glob(".legacy.bak"):
+                file_path.unlink()
 
     def test_default_wallet(self):
         self.log.info("Test migration of the wallet named as the empty string")
@@ -717,24 +736,10 @@ class WalletMigrationTest(BitcoinTestFramework):
         watch_only_dir = self.master_node.wallets_path / "default_wallet_watchonly"
         os.mkdir(watch_only_dir)
         shutil.copyfile(self.old_node.wallets_path / "wallet.dat", watch_only_dir / "wallet.dat")
-
-        mocked_time = int(time.time())
-        self.master_node.setmocktime(mocked_time)
         assert_raises_rpc_error(-4, "Failed to create database", self.migrate_and_get_rpc, "")
-        self.master_node.setmocktime(0)
-
-        # Verify the /wallets/ path exists
-        assert self.master_node.wallets_path.exists()
-        # Check backup file exists. Because the wallet has no name, the backup is prefixed with 'default_wallet'
-        backup_path = self.master_node.wallets_path / f"default_wallet_{mocked_time}.legacy.bak"
-        assert backup_path.exists()
-        # Verify the original unnamed wallet was restored
-        assert (self.master_node.wallets_path / "wallet.dat").exists()
-        # And verify it is still a BDB wallet
-        self.assert_is_bdb("")
 
         # Test cleanup: clear default wallet for next test
-        self.clear_default_wallet(backup_path)
+        self.clear_default_wallet()
 
     def test_direct_file(self):
         self.log.info("Test migration of a wallet that is not in a wallet directory")