I have never built a POB model. My wooden ships have been either solid hulls ala the Model Shipways kits, or a couple of slab sided exercises using styrene (edit: basswood or a combination of that and styrene)..
To fix this kit you have, the best way would be either to redesign the 2, 3 and 4 bulkheads by adding a "outy" to their "inny" in the area where the "S" comes and goes, or live with it.
This of course means removing all of the planking in the area back far enough towards the waist to where it becomes feasible to get a smooth transition. I'd do it with some solid .0625 wood fish bellies, clamped to either side of the offending bulkheads and sanded by eye back to a smooth bluff curvature. I sure wouldn't try adding filler material.
The problem remains though, it'll just be an indicator of more serious problems like a wrong counter under the stern, decks that don't line up with ports which several review mention- a real problem that can't be fixed easily, or who knows what.
But building a $ 200.00 bonfire to roast marshmallows is no fun either, so some sense of salvage is appropriate.
The Model Shipways site is down right now, but when it comes back to life look at some sales on their brigs and frigates. There are very nice models for sale. I too built the Fair American, as my second wood ship model. It took me quite a while, but every thing about it was enjoyable.
Kits like that, and more particularly from Blue Jacket, give you all kinds of great stuff like well written books, big scale drawings drawn by the real masters, photos of completed models by people who know what they are doing.
I'm currently building a stash of yellow box kits, schooners for the most part. At $ 100 - $200 a pop, I plan to spend my retirement, when it comes, happily gluing together kits using plank wood cut on my someday little tablesaw.
Just saying, a ship takes weeks to years, and it's more than worth it to start the drive on the 40 yard line rather than deep in the end zone.
Keep the parts as a wood supply, start with something that won't fight with you.
Bill