Wheeling-Pittsburgh Steel Corp., the nation's seventh-largest steel producer, will seek protection from creditors under federal bankruptcy laws in an effort to restructure $514 million in long-term debt, company officials announced yesterday in Pittsburgh.

The steel maker's board of directors approved the action Monday after a creditors' plan to stretch out the company's debt repayment schedule was rejected by officials of the United Steelworkers union, which represents 8,000 of its workers.

In negotiations over the past several months, Wheeling-Pittsburgh officials have been pushing the union to reduce its total hourly compensation to $19 an hour from $21.40. But the union, which has made $100 million in concessions since 1982, refused to give any more until the steel maker's bankers agreed to ease repayment terms on the company's debt.

Wheeling-Pittsburgh Chairman Dennis Carney and the company's lenders, headed by Manufacturers Hanover Trust Co., had agreed over the weekend to reschedule $219 million in debt repayment due in the next three years, a spokesman for the bank said. Then on Monday, the banks said they would extend a $40 million line of credit for Wheeling-Pittsburgh for four years.

But as a condition, the bankers reportedly insisted that their concessions be backed by $340 million in Wheeling-Pittsburgh collateral, in the form of cash, receivables and other assets.

The union feared that the commitment of this collateral would jeoparidize steelworkers' interests if Wheeling-Pittsburgh eventually went bankrupt.

The assets are Wheeling-Pittsburgh's "sole security," David Supino, the USW's investment adviser, told the Associated Press. Supino, employed by the New York investment banking firm of Lazard Freres & Co., said the union "cannot be party" to a situation in which the company's remaining wealth is put at risk.

"We may as well take our lumps now," Supino told AP.

Wheeling-Pittsburgh officials criticized that decision in a company statement issued yesterday.

"It is inconceivable to management that the USW and their investment banker have forced the Chapter 11 filing by withdrawing their concession offer because they did not agree with the terms of the bank agreement reached between management and the banks," the company said.

Chapter 11 allows debtors to reorganize their business operations while creditors are held at bay. It can be an excruciating experience, however.

Reorganization often means closing plants, laying off workers, cutting out losing product lines and performing other kinds of fiscal surgery.

The treatment is taken under the constant supervision of the bankruptcy court and affected creditors, whose interests are represented by creditor committees.

At almost any point during Chapter 11, the court and/or the creditors may object to, or otherwise modify, steps proposed by the debtor to improve its condition.

However, some Wall Street analysts suggested yesterday that Wheeling-Pittsburgh, which operates nine plants in West Virginia and Pennsylvania, could emerge from Chapter 11 a better company.

"If an outside group could buy Wheeling-Pittsburgh and cut its steel production costs by about 17 percent, from $480 to $400 a ton, the company could become one of the lowest-priced producers in the country," said Peter F. Marcus, a metals industry analyst with New York-based Paine Webber Mitchell Hutchins.

Marcus, emphasizing that he was describing a hypothetical situation, said that cuts would have to come in Wheeling-Pittsburgh's labor costs and interest payments -- about $60 million annually, according to some sources -- to be meaningful.

Wheeling-Pittsburgh lost a total of $122 million in 1982, 1983 and the first three quarters of 1984. When complete figures are in for last year, the company will show a loss of $170 million for the full three-year period, analysts estimated yesterday.

"It's been remarkable to me how long they've survived," Marcus said.

Left unanswered in yesterday's announcement is the fate of Wheeling-Pittsburgh's joint venture with Nisshin Steel Co. Ltd., Japan's largest producer of cold-rolled steel used in the automotive, appliance and office-equipment industries.

Nisshin and Wheeling-Pittsburgh agreed in February 1984 to build a new coating line in the Ohio River Valley by 1987 to help serve markets for cold-rolled steel.