In Perez v. Campbell, the U.S Supreme Court ruled in 1970 that state laws conflicting with federal bankruptcy laws were unenforceable under the Supremacy Clause of the Constitution. The case involved an Arizona man who filed for bankruptcy after causing a car accident and being unable to pay damages awarded to victims in a lawsuit. Despite his discharge from debts through bankruptcy, Arizona suspended his driver's license due to unpaid judgment stemming from the accident as per its financial responsibility law. The court held that this action violated federal law because it effectively negated Perez's fresh start granted by his discharge in bankruptcy proceedings. Therefore, while states have power over their own motor vehicle regulations, they cannot contravene federal statutes regarding debt relief.

In the dissenting opinion for Perez et ux. v. Campbell, Justice Hugo Black argued that the majority's decision was a misinterpretation of Section 17 of the Bankruptcy Act and its relation to state laws regarding driver's licenses. He contended that Arizona’s law did not conflict with federal bankruptcy laws because it served a different purpose: promoting public safety by ensuring financial responsibility from drivers who cause accidents, rather than collecting debt. The suspension or revocation of driving privileges until damages are paid is not an attempt to collect discharged debts but rather a penalty for irresponsible behavior on roads, according to him. Therefore, he believed this case should have been decided in favor of Arizona as their law does not contradict nor undermine federal bankruptcy policy.