diff --git a/contracts/lendingpool/LendingPoolLiquidationManager.sol b/contracts/lendingpool/LendingPoolLiquidationManager.sol
index 967a0087..e5c5b8b7 100644
--- a/contracts/lendingpool/LendingPoolLiquidationManager.sol
+++ b/contracts/lendingpool/LendingPoolLiquidationManager.sol
@@ -201,16 +201,12 @@ contract LendingPoolLiquidationManager is ReentrancyGuard, VersionedInitializabl
     //of _collateral to cover the actual amount that is being liquidated, hence we liquidate
     //a smaller amount
 
-    vars.collateralAtoken = AToken(payable(collateralReserve.aTokenAddress));
-
-    //if principalAmountNeeded < vars.ActualAmountToLiquidate, there isn't enough
-    //of _collateral to cover the actual amount that is being liquidated, hence we liquidate
-    //a smaller amount
-
     if (vars.principalAmountNeeded < vars.actualAmountToLiquidate) {
       vars.actualAmountToLiquidate = vars.principalAmountNeeded;
     }
 
+    vars.collateralAtoken = AToken(payable(collateralReserve.aTokenAddress));
+
     //if liquidator reclaims the underlying asset, we make sure there is enough available collateral in the reserve
     if (!_receiveAToken) {
       uint256 currentAvailableCollateral = IERC20(_collateral).universalBalanceOf(
@@ -224,6 +220,10 @@ contract LendingPoolLiquidationManager is ReentrancyGuard, VersionedInitializabl
       }
     }
 
+    //update the principal reserve
+    principalReserve.updateCumulativeIndexesAndTimestamp();
+    principalReserve.updateInterestRates(_reserve, vars.actualAmountToLiquidate, 0);
+
     if (vars.userVariableDebt >= vars.actualAmountToLiquidate) {
       IVariableDebtToken(principalReserve.variableDebtTokenAddress).burn(
         _user,
@@ -245,6 +245,11 @@ contract LendingPoolLiquidationManager is ReentrancyGuard, VersionedInitializabl
       vars.collateralAtoken.transferOnLiquidation(_user, msg.sender, vars.maxCollateralToLiquidate);
     } else {
       //otherwise receives the underlying asset
+
+      //updating collateral reserve
+      collateralReserve.updateCumulativeIndexesAndTimestamp();
+      collateralReserve.updateInterestRates(_collateral, 0, vars.maxCollateralToLiquidate);
+
       //burn the equivalent amount of atoken
       vars.collateralAtoken.burnOnLiquidation(_user, vars.maxCollateralToLiquidate);
       vars.collateralAtoken.transferUnderlyingTo(msg.sender, vars.maxCollateralToLiquidate);
diff --git a/test/liquidation-atoken.spec.ts b/test/liquidation-atoken.spec.ts
index 8019ad21..a523fb05 100644
--- a/test/liquidation-atoken.spec.ts
+++ b/test/liquidation-atoken.spec.ts
@@ -197,6 +197,18 @@ makeSuite('LendingPool liquidation - liquidator receiving aToken', (testEnv) =>
       'Invalid principal available liquidity'
     );
 
+    //the liquidity index of the principal reserve needs to be bigger than the index before
+    expect(daiReserveDataAfter.liquidityIndex.toString()).to.be.bignumber.gt(
+      daiReserveDataBefore.liquidityIndex.toString(),
+      'Invalid liquidity index'
+    );
+
+    //the principal APY after a liquidation needs to be lower than the APY before
+    expect(daiReserveDataAfter.liquidityRate.toString()).to.be.bignumber.lt(
+      daiReserveDataBefore.liquidityRate.toString(),
+      'Invalid liquidity APY'
+    );
+
     expect(ethReserveDataAfter.availableLiquidity).to.be.bignumber.almostEqual(
       new BigNumber(ethReserveDataBefore.availableLiquidity.toString()).toFixed(0),
       'Invalid collateral available liquidity'
@@ -317,6 +329,18 @@ makeSuite('LendingPool liquidation - liquidator receiving aToken', (testEnv) =>
       'Invalid principal available liquidity'
     );
 
+    //the liquidity index of the principal reserve needs to be bigger than the index before
+    expect(usdcReserveDataAfter.liquidityIndex.toString()).to.be.bignumber.gt(
+      usdcReserveDataBefore.liquidityIndex.toString(),
+      'Invalid liquidity index'
+    );
+
+    //the principal APY after a liquidation needs to be lower than the APY before
+    expect(usdcReserveDataAfter.liquidityRate.toString()).to.be.bignumber.lt(
+      usdcReserveDataBefore.liquidityRate.toString(),
+      'Invalid liquidity APY'
+    );
+
     expect(ethReserveDataAfter.availableLiquidity).to.be.bignumber.almostEqual(
       new BigNumber(ethReserveDataBefore.availableLiquidity.toString()).toFixed(0),
       'Invalid collateral available liquidity'