I have a lot of problems with paranoid thoughts too. I would actually list it as probably the most distressing/debilitating/potentially dangerous symptom I've ever had. Sometimes it works to distract myself with something really interesting and engaging (for me that's usually reading or writing). When that fails, though, I'm reaching for extra medication, as I'm on several meds that specifically target and help paranoia and anxiety.
And yes, sleep deprivation makes it a hundred times worse. If you don't have a medication that can help with sleep when you're falling into that cycle, you should ask your doctor about prescribing something you can take at least occasionally to help.
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