Do we have to talk with our lender during the foreclosure process and why?

You've already had a foreclosure suit filed against you so your credit is shot. Depending on your state and county, an unopposed mortgage action can take anywhere from 2 months to 6 months. By filing a answer in the mortgage action that goes up by several months. There is no income from "forgiveness of indebtedness" due to a foreclosure, if the house sells for less than you owe, the lender has a judgment for the deficiency, so they can garnish your wages, seize your bank account, etc. In order to get the negative equity eliminated you need to have the bank accept a short sale or a deed in lieu. Bankruptcy will eliminate the deficiency and delay the foreclosure.

You are not required to speak with your lender, but since a foreclosure is a very damaging thing to have happen, you might want to consider other options in order to prevent foreclosure. Your mortgage company can explain these options, as can a local bankruptcy attorney or a realtor. You could attempt a short sale, you could offer a deed in lieu of foreclosure, or you could look at various options to keep the property, such as by reducing the monthly payments or creating an income from the property by renting it.

No responsible lawyer could answer a question about whether or not you should file bankruptcy without a lengthy discussion and reviewing many facts and numbers. If you do not respond to the Summons and Complaint the creditor will win a judgment of foreclosure by default, and you would lose any opportunity to disagree either with the creditor's right to foreclose, or with the amounts demanded, or facts stated. Generally I treat foreclosure complaints somewhat differently trying to preserve all the clients rights. You could let the creditor know that you are not abandoning the property, and that you want the full redemption period provided by law. (It's several months longer if you are still living in the property.) Good Luck.

Bankruptcy will not stop a foreclosure other than temporarily. In California foreclosures are non-judicial, there is no court to go to. One day the home will be sold at auction and you will cease to own it.