diff --git a/Annex/AdjustedBranch.hs b/Annex/AdjustedBranch.hs
index 177ed77bf8..f2a624987b 100644
--- a/Annex/AdjustedBranch.hs
+++ b/Annex/AdjustedBranch.hs
@@ -28,6 +28,7 @@ module Annex.AdjustedBranch (
 	checkAdjustedClone,
 	isSupported,
 	checkVersionSupported,
+	isGitVersionSupported,
 ) where
 
 import Annex.Common
@@ -227,6 +228,7 @@ updateAdjustedBranch adj@(LinkAdjustment _) _ origbranch = preventCommits $ \com
 adjustToCrippledFileSystem :: Annex ()
 adjustToCrippledFileSystem = do
 	warning "Entering an adjusted branch where files are unlocked as this filesystem does not support locked files."
+	checkVersionSupported
 	whenM (isNothing <$> originalBranch) $
 		void $ inRepo $ Git.Branch.commitCommand Git.Branch.AutomaticCommit
 			[ Param "--quiet"
diff --git a/Annex/Init.hs b/Annex/Init.hs
index cb7a81003d..6736e84ae2 100644
--- a/Annex/Init.hs
+++ b/Annex/Init.hs
@@ -23,6 +23,7 @@ import qualified Annex
 import qualified Git
 import qualified Git.Config
 import qualified Git.Objects
+import qualified Git.LsFiles
 import qualified Annex.Branch
 import Logs.UUID
 import Logs.Trust.Basic
@@ -32,11 +33,12 @@ import Types.RepoVersion
 import Annex.Version
 import Annex.Difference
 import Annex.UUID
+import Annex.Link
 import Annex.WorkTree
 import Config
 import Config.Smudge
 import Annex.Direct
-import Annex.AdjustedBranch
+import qualified Annex.AdjustedBranch as AdjustedBranch
 import Annex.Environment
 import Annex.Hook
 import Annex.InodeSentinal
@@ -114,13 +116,13 @@ initialize' ai mversion = checkCanInitialize ai $ do
 		unlessM isBareRepo $ do
 			hookWrite postCheckoutHook
 			hookWrite postMergeHook
-	checkAdjustedClone >>= \case
-		NeedUpgradeForAdjustedClone -> 
+	AdjustedBranch.checkAdjustedClone >>= \case
+		AdjustedBranch.NeedUpgradeForAdjustedClone -> 
 			void $ upgrade True versionForAdjustedClone
-		InAdjustedClone -> return ()
-		NotInAdjustedClone ->
+		AdjustedBranch.InAdjustedClone -> return ()
+		AdjustedBranch.NotInAdjustedClone ->
 			ifM (crippledFileSystem <&&> (not <$> isBareRepo))
-				( adjustToCrippledFileSystem
+				( adjustToCrippledFilesystem
 				-- Handle case where this repo was cloned from a
 				-- direct mode repo
 				, unlessM isBareRepo
@@ -282,3 +284,20 @@ propigateSecureHashesOnly :: Annex ()
 propigateSecureHashesOnly =
 	maybe noop (setConfig (ConfigKey "annex.securehashesonly"))
 		=<< getGlobalConfig "annex.securehashesonly"
+
+adjustToCrippledFilesystem :: Annex ()
+adjustToCrippledFilesystem = ifM (liftIO $ AdjustedBranch.isGitVersionSupported)
+	( do
+		void $ upgrade True versionForCrippledFilesystem
+		AdjustedBranch.adjustToCrippledFileSystem
+	, enableDirectMode 
+	)
+
+enableDirectMode :: Annex ()
+enableDirectMode = unlessM isDirect $ do
+	warning "Enabling direct mode."
+	top <- fromRepo Git.repoPath
+	(l, clean) <- inRepo $ Git.LsFiles.inRepo [top]
+	forM_ l $ \f ->
+		maybe noop (`toDirect` f) =<< isAnnexLink f
+	void $ liftIO clean
diff --git a/Annex/Version.hs b/Annex/Version.hs
index d7cd816f8d..5827dcbd4a 100644
--- a/Annex/Version.hs
+++ b/Annex/Version.hs
@@ -28,6 +28,9 @@ supportedVersions = map RepoVersion [5, 7]
 versionForAdjustedClone :: RepoVersion
 versionForAdjustedClone = RepoVersion 7
 
+versionForCrippledFilesystem :: RepoVersion
+versionForCrippledFilesystem = RepoVersion 7
+
 upgradableVersions :: [RepoVersion]
 #ifndef mingw32_HOST_OS
 upgradableVersions = map RepoVersion [0..6]
diff --git a/CHANGELOG b/CHANGELOG
index fbb0fbb394..0b40a64107 100644
--- a/CHANGELOG
+++ b/CHANGELOG
@@ -5,6 +5,10 @@ git-annex (7.20181122) UNRELEASED; urgency=medium
     Thanks, Robert Schütz
   * When running youtube-dl to get a filename, pass --no-playlist.
   * Fix build without concurrent-output.
+  * init: When a crippled filesystem causes an adjusted unlocked branch to
+    be used, set repo version to 7, which it neglected to do before.
+  * init: When on a crippled filesystem, and the git version is too old
+    to use an adjusted unlocked branch, fall back to using direct mode.
 
  -- Joey Hess <id@joeyh.name>  Tue, 27 Nov 2018 12:29:27 -0400