What happens if my Apple ID was hacked and hacker activates iPhone in Lost Mode?

iOS / iPadOS devices cannot be hacked or infected with Virus / Malware / Spyware unless you have intentionally downloaded spurious software or unauthorized apps directly from the internet and installed them on your device or/and have Jailbroken. 

It (Hacking) also depends on how careful you are in sharing sensitive and valuable information pertaining to your iPhone such as Passcode, Password, etc with your friends and family members.

Be judicious when sharing the device's sensitive and valuable information with friends and family members.

If you don't reckon what is said above is true then you have two options...

1. Report the hacking incident that you are facing to the local law enforcement authorities and follow it up
2. Believe it, it can't be hacked. There are people who still believe that the earth is flat and also some believe no one has ever landed on the moon. What can anyone do about that? This is a free world you can believe in anything, the choice is yours.

If you feel an unauthorized person/app is remotely using, controlling or monitoring your device, then that is possible only if you have done one or more of the following Don'ts...

1. Don't hand over an iPhone to kids or to a stranger without Enabling Guided Access
2. Don't share Apple IDs
3. Don't Jailbreak
4. Don't share sensitive information pertaining to your device
5. Don't give in to Phishing
6. Don't plug in your device in Airports and Public places through third-party cables and trust the device. Beware of Juice Jacking. (Especially in India)
7. Don't leave your iPhone unlocked and unattended in public places like offices, schools, malls, etc.

If one of the above is true then quickly change the Apple ID Password and Return iPhone settings to their defaults.

If you do not remember the Apple ID Password then follow the steps given in this Apple Article -> If you forgot your Apple ID password - Apple Support

If you do not remember the Apple ID then follow the steps given in this Apple Article -> If you forgot your Apple ID - Apple Support

If you are the owner or the owner has shared all information with you then to open Activation Lock:- If it is Activation locked, read here --> Turn off Activation Lock - Apple Support Activation Lock for iPhone, iPad, and iPod touch - Apple Support

Learn how to remove a device from a previous owner's account.

If you are not the owner and do not have the Apple ID and Password then there is no way that you can get into this iPhone unless the original owner shares the Apple ID and password with you. If you are lucky you can get into this iPhone if they (owner) accidentally remove the device from their Apple ID.

Turn off Lost Mode on an iPhone, iPad, iPod touch or Apple Watch

When you find your lost device, do either of the following to turn off Lost Mode:

• Enter your passcode on the device.
• In Find My iPhone on iCloud.com, click All Devices, then select the device that is in Lost Mode. Click Lost Mode, click Stop Lost Mode and then click Stop Lost Mode again.

Note: If you had any cards suspended when you put your device in Lost Mode (credit or debit cards for Apple Pay, student ID cards or Express Travel cards), when you turn off Lost Mode and sign back into iCloud, you can use them again.