If one car was repossessed and you are making payments on another car can they take your only car even though you owe on it?

If payments are current and there has been no breach of the loan contract the car cannot legally be repossesed. It is highly unlikely that any lender would want to initiate such proceedings if they are getting paid in a timely fashion. Repo is the last thing a lender wants to do.

Even though bankruptcy is filed in federal court; asset exemptions are determined by state law. You would need to pose this question to an attorney familiar with (your states') bankruptcy laws.