Flea-infested collie Julie, which had two large tumours, rotting teeth and could not walk, was humanely destroyed to end her misery.
Her owner, Nicola Bayford, 37, pictured, was warned that she could be locked up after Chelmsford magistrates saw photographs of the mange-covered dog.
The bench said it was one of the worst cruelty cases they had dealt with, blaming Bayford for prolonging her neglect.
"We've seen a number of animal cruelty cases and this comes fairly close to the top – it is so serious you may go to prison," she was told.
When she appeared before the court on Monday, Bayford, of Bryony Close, Witham, admitted causing unnecessary suffering to the dog on July 28. She was bailed for probation reports until January 5.
Magistrates imposed an interim order banning her from keeping or having responsibility for animals.
Braintree District Council dog warden Stuart Thompson discovered Julie near Bryony Close after being tipped off about a stray dog and took it to Black Notley vet Helen Archibald.
Steven Hopkins, prosecuting, said the vet's verdict was that Julie had suffered unnecessarily due to serious neglect, estimating she could have had a "miserable" existence for up to 12 months.
The vet found that Julie's decaying teeth and gums were in a "terrible" condition, saying her owner had showed a blatant disregard for care and compassion.
Mr Thompson traced Bayford after she put up "Missing Dog" posters on lampposts near her home.
The council took legal action after the RSPCA failed to prosecute Bayford and an official complaint had since been sent to the animal welfare organisation.
Stephen Levy, mitigating, said after Bayford's marriage broke up her finances had gone "from bad to worse" and she could not afford vet's fees.
"She put Julie's bad health down to her being 16 years old and was faced with a choice – feed the kids or take the dog to a vet.
"They loved the dog and that it why she put up posters trying to find her," he said.
He said Bayford had asked the RSPCA, PDSA and Blue Cross animal charities for help but was told Witham did not come within their area and she got the same answer from an animal sanctuary.
After the hearing an RSPCA spokeswoman said: "An inspector took the dog to a vet to be put to sleep to end her suffering.
"The normal process would then be to put together a case file with a view to possible prosecution. In this case, because the inspector had a huge workload a file was not put together and the case was investigated by the local authority.
"The RSPCA is often passed information by the local authority and we investigate on their behalf. We are grateful that they were able to help on this occasion."