if (is_packed_transaction_needed(refs->packed_ref_store,
                                                 packed_transaction)) {
                        ret = ref_transaction_prepare(packed_transaction, err);
+                       /*
+                        * A failure during the prepare step will abort
+                        * itself, but not free. Do that now, and disconnect
+                        * from the files_transaction so it does not try to
+                        * abort us when we hit the cleanup code below.
+                        */
+                       if (ret) {
+                               ref_transaction_free(packed_transaction);
+                               backend_data->packed_transaction = NULL;
+                       }
                } else {
                        /*
                         * We can skip rewriting the `packed-refs`
                         * file. But we do need to leave it locked, so
                         * that somebody else doesn't pack a reference
                         * that we are trying to delete.
+                        *
+                        * We need to disconnect our transaction from
+                        * backend_data, since the abort (whether successful or
+                        * not) will free it.
                         */
+                       backend_data->packed_transaction = NULL;
                        if (ref_transaction_abort(packed_transaction, err)) {
                                ret = TRANSACTION_GENERIC_ERROR;
                                goto cleanup;
                        }
-                       backend_data->packed_transaction = NULL;
                }
        }