Players can respond to Collateral Damage only after it’s been cast and all its costs have been paid. No one can try to destroy the creature you sacrificed to stop you from casting this spell.

If you sacrifice an attacking or blocking creature during the declare blockers step, it won’t deal combat damage. If you wait until the combat damage step, but that creature is dealt lethal damage, it’ll be destroyed before you get a chance to sacrifice it.

You must sacrifice exactly one creature to cast this spell; you can’t cast it without sacrificing a creature, and you can’t sacrifice additional creatures.