diff --git a/peer.go b/peer.go
index df33543c..cead16c6 100644
--- a/peer.go
+++ b/peer.go
@@ -155,6 +155,10 @@ type peer struct {
 	// channels to the source peer which handled the funding workflow.
 	newChannels chan *newChannelMsg
 
+	// activeMsgStreams is a map from channel id to the channel streams that
+	// proxy messages to individual, active links.
+	activeMsgStreams map[lnwire.ChannelID]*msgStream
+
 	// activeChanCloses is a map that keep track of all the active
 	// cooperative channel closures that are active. Any channel closing
 	// messages are directed to one of these active state machines. Once
@@ -253,6 +257,8 @@ func newPeer(conn net.Conn, connReq *connmgr.ConnReq, server *server,
 		activeChannels: make(map[lnwire.ChannelID]*lnwallet.LightningChannel),
 		newChannels:    make(chan *newChannelMsg, 1),
 
+		activeMsgStreams: make(map[lnwire.ChannelID]*msgStream),
+
 		activeChanCloses:   make(map[lnwire.ChannelID]*channelCloser),
 		localCloseChanReqs: make(chan *htlcswitch.ChanClose),
 		linkFailures:       make(chan linkFailureReport),
@@ -990,8 +996,6 @@ func (p *peer) readHandler() {
 	discStream := newDiscMsgStream(p)
 	discStream.Start()
 	defer discStream.Stop()
-
-	chanMsgStreams := make(map[lnwire.ChannelID]*msgStream)
 out:
 	for atomic.LoadInt32(&p.disconnect) == 0 {
 		nextMsg, err := p.readNextMessage()
@@ -1081,38 +1085,8 @@ out:
 			}
 
 		case *lnwire.Error:
-			key := p.addr.IdentityKey
-
-			switch {
-			// In the case of an all-zero channel ID we want to
-			// forward the error to all channels with this peer.
-			case msg.ChanID == lnwire.ConnectionWideID:
-				for chanID, chanStream := range chanMsgStreams {
-					chanStream.AddMsg(nextMsg)
-
-					// Also marked this channel as failed,
-					// so we won't try to restart it on
-					// reconnect with this peer.
-					p.failedChannels[chanID] = struct{}{}
-				}
-
-			// If the channel ID for the error message corresponds
-			// to a pending channel, then the funding manager will
-			// handle the error.
-			case p.server.fundingMgr.IsPendingChannel(msg.ChanID, key):
-				p.server.fundingMgr.processFundingError(msg, key)
-
-			// If not we hand the error to the channel link for
-			// this channel.
-			default:
-				isLinkUpdate = true
-				targetChan = msg.ChanID
-
-				// Also marked this channel as failed, so we
-				// won't try to restart it on reconnect with
-				// this peer.
-				p.failedChannels[targetChan] = struct{}{}
-			}
+			isLinkUpdate = p.handleError(msg)
+			targetChan = msg.ChanID
 
 		case *lnwire.ChannelReestablish:
 			isLinkUpdate = true
@@ -1142,13 +1116,13 @@ out:
 		if isLinkUpdate {
 			// If this is a channel update, then we need to feed it
 			// into the channel's in-order message stream.
-			chanStream, ok := chanMsgStreams[targetChan]
+			chanStream, ok := p.activeMsgStreams[targetChan]
 			if !ok {
 				// If a stream hasn't yet been created, then
 				// we'll do so, add it to the map, and finally
 				// start it.
 				chanStream = newChanMsgStream(p, targetChan)
-				chanMsgStreams[targetChan] = chanStream
+				p.activeMsgStreams[targetChan] = chanStream
 				chanStream.Start()
 				defer chanStream.Stop()
 			}
@@ -1166,6 +1140,42 @@ out:
 	peerLog.Tracef("readHandler for peer %v done", p)
 }
 
+// handleError processes an error message read from the remote peer. The boolean
+// returns indicates whether the message should be delivered to a targeted peer.
+//
+// NOTE: This method should only be called from within the readHandler.
+func (p *peer) handleError(msg *lnwire.Error) bool {
+	key := p.addr.IdentityKey
+
+	switch {
+
+	// In the case of an all-zero channel ID we want to forward the error to
+	// all channels with this peer.
+	case msg.ChanID == lnwire.ConnectionWideID:
+		for chanID, chanStream := range p.activeMsgStreams {
+			chanStream.AddMsg(msg)
+
+			// Also marked this channel as failed, so we won't try
+			// to restart it on reconnect with this peer.
+			p.failedChannels[chanID] = struct{}{}
+		}
+		return false
+
+	// If the channel ID for the error message corresponds to a pending
+	// channel, then the funding manager will handle the error.
+	case p.server.fundingMgr.IsPendingChannel(msg.ChanID, key):
+		p.server.fundingMgr.processFundingError(msg, key)
+		return false
+
+	// If not we hand the error to the channel link for this channel.
+	default:
+		// Mark this channel as failed, so we won't try to restart it on
+		// reconnect with this peer.
+		p.failedChannels[msg.ChanID] = struct{}{}
+		return true
+	}
+}
+
 // messageSummary returns a human-readable string that summarizes a
 // incoming/outgoing message. Not all messages will have a summary, only those
 // which have additional data that can be informative at a glance.